taxes

Obama v. McCain: How much will you pay in taxes?

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9-26 taxman.jpg

Barack Obama says 95% of Americans will get a tax cut if he’s elected. McCain says … well, whatever he’s saying that day or week. But what does it all mean for you? Under a McCain or Obama regime, how much of your hard-earned booty will the IRS demand for such indispensable national priorities as, say, endless wars of choice and making sure Wall Street billionaires don’t have to sell their second ski lodges? Now you can find out at this handy new website.

I entered a few different incomes into the calculator, starting low and adding a couple-ten thousand each time. And, if this magical contraption of the netwebs and intertubes is to be believed, it does appear that Obama’s tax plan will save people making under $125,000 a few hundred bucks a year. Note: I did not enter deductions, investments, assets, etc. – just straight income.

What are safe streets?

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› amanda@sfbg.com

The San Francisco Streets and Neighborhoods workgroup, convened by Mayor Gavin Newsom, sat down to its seventh meeting Sept. 9 "to analyze and understand the key issues impacting safety on our streets and formulate recommendations for needed improvement with the goal of creating a safe environment on our streets for everyone."

Some of the top dogs on public safety were at the table, including Police Chief Heather Fong, fire department Capt. Pete Howes, representatives from the district attorney and public defender’s offices, and Kevin Ryan of the Mayor’s Office of Criminal Justice, who co-chairs the group.

Were they here to discuss the recent spike in shootings in the Mission District? The murder of a Western Addition teenager three days earlier? The effectiveness of gang injunctions in those neighborhoods? The upcoming march on City Hall of students from June Jordan High School demanding leadership from the mayor on the rise in violence?

Not really. A quick survey of the agenda indicated most of the talk would be focused on another great threat to public safety: homeless people.

"One of the things we never talked about is what are the specific undesirable behaviors we’re focusing on," facilitator Gary Koenig said to the group. Wielding a dry-erase marker at the whiteboard, he probed further, "In other words, the objective we set for ourselves had to do with safety on the streets. So what are the objectionable behaviors that make the street unsafe or make the street be perceived as unsafe by others?"

"Shooting people," blurted Seth Katzman, a representative from the Human Services Network, a coalition of nonprofits.

The room erupted in laughter.

"I’m going to keep bringing it up," he said, not laughing.

Koenig asked what other activities they were targeting, and a more telling picture emerged: drug dealing, aggressive panhandling, blocking the sidewalk, public urination and defecation, littering, intimidation.

"On intimidation," said Chief Fong, "if you have someone walking down the street and they’re yelling out or blasting out, sometimes they’re talking to themselves and all of a sudden, ahh! People don’t know how to respond and think that maybe there’s going to be a next step in terms of some kind of aggressive behavior."

"Would you call that scary behavior?" asked Koenig, marker poised to note.

"Just kind of unpredictable behavior in terms of how someone’s carrying themselves. They haven’t committed a crime, but …" Fong trailed off.

Koenig added "unpredictable behavior" to the list. "Remember, we’re really not talking about crimes here," he said. "We’re talking about what are we focusing on to help improve safety and the sense of safety on our streets."

That’s the real mission of the group: to make downtown more comfortable for tourists, shoppers, business owners, and condo residents; and more uncomfortable for homeless and poor people panhandling, loitering, urinating in public, acting strangely, getting loaded, or sleeping on the streets.

The group was clearly weighted toward enforcement, but coordinated with buy-in from those who demonize the homeless and those who defend them: Ryan, a law-and-order Republican, shares chair duties with the Rev. John Hardin, executive director of the homeless services nonprofit St. Anthony Foundation. Others at the meeting included Steve Falk of the San Francisco Chamber of Commerce; Heather Hoell of Yerba Buena Alliance; Joe D’Alessandro, CEO of the Convention and Visitors Bureau; Bobbie Rosenthal from Local Homeless Coordinating Board; Anne Kronenberg of the Department of Public Health; Reginald Smith from the 10-Year Council on Homelessness; Jennifer Friedenbach from the Coalition on Homelessness; Human Services Agency director Trent Rhorer; and Dariush Kayhan, the mayor’s homeless policy director.

Their ultimate goal is to come up with a handful of recommendations for a street safety pilot project that Newsom will implement in two neighborhoods within six months. The group’s task, on this day, was to weed through the list and decide what the group would endorse.

So far all the proposals have targeted poor and homeless people with enhanced services, punishment threats, and new restrictions on street life. Suggestions ranged from establishing drug-free and "VIP" zones in the downtown business and tourist areas (which came from the Chamber) to COH’s suggestion to fully fund treatment on demand. But all agreed that money is tight.

"If we did a lot of the service things, we probably wouldn’t be doing a lot of the others," Hardin noted early in the meeting, indicating the enforcement and justice items.

The mayor has not set aside any funding to implement the pilot projects, according to Kayhan. And that reality steered the group away from social services and toward crackdowns.

For example, Friedenbach suggested the chronic inebriate program run by DPH does a good job, but said that it’s underfunded and should be evaluated and expanded. Koenig asked DPH’s Anne Kronenberg if this is possible.

"You know it all comes down to money," she replied. "There’s a little disconnect going on for me. What we’re saying is good but I also know what the budget situation is in the city. That’s one [sticking point] where if we could get the mayor on board … or some other creative way of funding."

"Money is a real issue," Rhorer piped up. "So I’m thinking maybe if it’s a high cost item, we take it off the list." Yet, he added, "I totally agree the chronic inebriate program needs to be expanded to more placement facilities."

Instead, it was removed from the list.

"The problem is, if we take out some of these matters, what we’re going to be left with is enforcement ordinances and the justice system. And I think we all agreed a long time ago the idea isn’t to incarcerate people, but to get housing and services for them," Katzman complained. "It’s going to leave us with the stick and not the carrot."

Recommendations in the "stick" category included establishing "drug free zones" with enhanced penalties for dealing, using, and possession. Similar zones already exist within 1,000 feet of schools and parks in San Francisco, but have been implemented more broadly in other cities.

After discussing the constitutionality of making one street corner drug-free but not others, some suggested folding it in with another idea on the list: VIP zones.

"What does VIP stand for?" someone asked.

"Very Important Person," someone else answered.

"How about B and T? Business and tourism zones?" Rhorer suggested. "Marketing of VIP sounds a little more difficult."

According to the description on the meeting agenda, VIP zones would be established around downtown, the Yerba Buena center, Fisherman’s Wharf, Chinatown, and Union Square as areas subject to "special enforcement of drug laws, aggressive panhandling, sitting/lying on sidewalks" and other "quality of life crimes."

Defending the idea, D’Alessandro said, "Just from our perspective, tourism generates $500 million a year in local taxes that fund a lot of the programs we’re talking about at this table. And we’re very threatened. We’ve lost a lot of business." He said one convention bailed because a visitor was spit on.

"There’s obviously huge problems with this. It’s specifically targeting people because of their status, their housing status," Friedenbach said, sarcastically suggesting they have a registration for homeless people entering certain areas of the city.

"I think we have to separate aggressive panhandling and blocking thoroughfares from poverty," D’Alessandro said. "This is not targeting poor people."

"When you say sitting and lying on the sidewalk, that is targeting people who don’t have a place to sit," Friedenbach countered.

"Maybe we don’t do this unless we provide places to sit," D’Alessandro replied."

"Like more drop-in centers," Rhorer offered.

But temporary places to sit and sleep don’t seem like part of Newsom’s vision. Since he took office, more than 400 shelter beds have been lost. In March, Newsom defunded the only city-funded 24-hour drop-in center serving both men and women.

By the end of the meeting, many of the ideas for enhancing services remained in play, like ramping up Project Homeless Connect and the Homeless Outreach Teams, as well as more drop-in centers, housing, and job programs. All of the law enforcement–oriented changes were still on the list, including implementing the drug-free and VIP zones.

Speaking afterward, Katzman returned to the issue of what defines safety, and for whom. "We have tenants and clients in the Tenderloin who are afraid to go out of their buildings at night because of drug-related violence. They’re not complaining to us about people peeing on the streets," he said. "No one likes it, but that’s not the big issue right now."

Editor’s Notes

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› tredmond@sfbg.com

The Democrats, who control both houses of the state Legislature, lost badly on the state budget. They caved in, they sold out — and the worst part is, they had very little choice.

The state can’t keep running forever without a budget. I think we could have gone a little longer, and the Democrats could have turned up the public pressure a bit more, but in the end, it probably wouldn’t have mattered a bit. A small number of anti-tax Republicans from very conservative districts now control the entire state budget process.

And the worst part of that is, I’m not sure we can change that. So I’m thinking we should try something else.

Just about everybody knows by now that California is one of only three states that requires a two-thirds Legislative majority to approve a budget. The state Constitution also requires a two-thirds vote to raise taxes. So unless the Democrats can take control of both houses by a 67 percent majority, the GOP can exert a veto over any attempt to close a budget deficit with anything but deep, draconian cuts.

And the Republicans who hold sway aren’t the moderate types who might want to negotiate. One reason the Democrats control both the Assembly and the Senate is that they’ve been experts at drawing legislative lines, shoving large majorities of Republicans into a small number of districts. That means more Democrats in Sacramento — but it also means that many of the Republicans represent areas where there’s little chance a Democrat can challenge them — and where the voters will rebel against any representative who raises taxes.

"The Republicans have no incentive ever to raise taxes," Assemblymember Mark Leno explained to me recently. "They all fear that if they vote for a tax increase, they will lose their seats. And history shows that they are right."

That’s why the polls show an overwhelming percentage of Californians want better schools — but the state budget will take billions away from education, putting the next generation of Californians at risk.

So the buzz in more progressive circles in Sacramento is starting to focus on a constitutional reform that would eliminate the supermajority for budget approval. But that would only be meaningful if we also scrapped the two-thirds rule for new taxes — and that’s going to be a tough sell. I can see the money flowing by the tens of millions into a campaign to keep legislators from raising taxes. And given the fact that the public in general doesn’t trust the Legislature, it’s possible that battle will be lost.

Over and over, starting with Proposition 13 in 1978, California voters have approved anti-tax measures. I hope we can turn that tide around, but I think we also need a backup plan.

See, it doesn’t take a supermajority to give cities and counties the right to raise taxes on their own.

Leno, for example, has a bill that would allow cities to impose their own car taxes. In San Francisco, we’re talking big money, $50 million or so — enough, perhaps, to blunt the impact of the state’s cuts to public schools and public health. It might be easier to push for the passage of that sort of measure than for statewide Constitutional reform.

Let cities pass their own income taxes. Let counties impose oil-severance taxes. Amend Prop. 13 to allow higher taxes on commercial property.

Then maybe San Francisco and Berkeley and Los Angeles will wind up with better schools and parks and streets and hospitals, and Orange Country and the other anti-tax havens will see their public services collapse as the state keeps cutting. Maybe after a while they’ll get the point.

Cleaner and cheaper

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>>Click here for our chart explaining how San Francisco can take over PG&E’s system — and wind up with $214 million a year in extra revenue. (PDF)

>>Click here for a comparison of public power and investor-owned utilities on rates and renewable energy. (PDF)

>>Click here for a comparison of Mark Leno’s Sacramento PG&E and SMUD (public) bills. (PDF)

› amanda@sfbg.com

Pacific Gas & Electric Co. has been saying that if the Clean Energy Act passes, it will cost the city $4 billion — and electricity bills will go up $400 a year per household to cover the costs.

But according to a Guardian analysis, a publicly owned utility could cover the costs of taking over PG&E’s system, finance enough renewable energy generation to make the local grid 50 percent green, and still generate $214 million a year in surplus income — without raising rates a dime.

In fact, the city could cut electricity rates by 15 percent — so that the average San Francisco home using 1,000 kWh a month would save $400 per year — and the system would still make $107 million profit annually.

Our analysis is based on conservative assumptions, and probably underestimates the city’s potential revenue. The figures all come from publicly available sources.

The bottom line: PG&E’s campaign materials are, at best, gross distortions of the truth.

WHAT PUBLIC POWER WOULD COST


The Clean Energy Act, which will appear as Proposition H on the November ballot, mandates that the city undertake a study to determine the most cost effective and expeditious way to achieve 100 percent renewable energy by 2040.

If the study determines that a publicly owned utility would provide the cheapest, cleanest energy, the first thing the city would need is a distribution system — the wires, poles, substations, breakers, and all the other physical infrastructure required to provide power. The legislation authorizes city officials to issue revenue bonds to build a distribution system or to buy PG&E’s, either through a negotiated sale price or eminent domain.

In 2001, the last time the city voted on a public power measure, PG&E said its system was worth $1.4 billion. Seven years later, although much of the system has deteriorated, the price has jumped to $4 billion. But utility officials freely admit they have no hard numbers: in a letter dated July 24, David Rubin, the director of service analysis, wrote, "PG&E has not done an inventory of its system, but it is readily apparent that the fair market value of PG&E’s electric system exceeds $4 billion … "

There are, in fact, hard numbers on the value of the system — numbers that both PG&E and state tax officials have used and agreed on for years.

The state Board of Equalization is tasked with determining property values on utilities and levying taxes accordingly. In 2007 the board reports, PG&E paid taxes on property worth $1.2 billion in San Francisco. That’s what the state auditors say is the value of everything PG&E owns here, including both the electricity and gas distribution lines, the buildings on Market and Beale streets, the service center, vehicles, desks, computers — much of which the city would have no interest in acquiring.

According to documents acquired through a public records request, the city controller’s office assumed in its ballot analysis of the cost of Prop. H that 50 percent of the assessed value was utility related.

We’ll make the same assumption. If the San Francisco controller and Board of Equalization are right, the actual value of PG&E’s electricity distribution infrastructure is $595 million.

That could be a bit low or a bit high — real estate appraisal is an inexact science — but at least it’s derived from a solid number. Even if you assume that the board’s appraisers are off by a few tens of millions of dollars in either direction, the number PG&E has put forward is wrong by about 600 percent.

Rubin’s letter to the city controller outlined how PG&E determined $4.18 billion as the system’s worth — by using "replacement cost new less depreciation" (RCNLD) as a measure. "California law specifically approves RCNLD as a method for valuing improvements to land, such as the electric facilities at issue here," Rubin wrote.

But appraisers disagree with Rubin. "The Code of Evidence section they are referring to mentions RCNLD as one of many pieces of evidence that can be considered in valuation cases," a veteran appraiser with knowledge of PG&E’s system, who requested anonymity, told the Guardian.

Because PG&E is a regulated utility that passes all the capital costs of doing business onto customers, many valuators argue that the rates those customers pay (reflected in the BOE figures) indicate the true value of the system.

"The value is the value is the value," the appraiser said. "Both PG&E and the BOE agree that fair market value is approximately equal to rate base." That, in this case, would be about $600 million.

William Marcus, a lead economist on utility issues for JBS Energy with 29 years experience in the field, told us that the standard method employed by the BOE in valuing energy utilities is original cost less depreciation and deferred taxes. "I’m not going to tell you RCNLD is $4 billion because PG&E has been known to come up with very high values," Marcus said. Even the RCNLD value is "almost certainly a serious matter of controversy." Marcus, a Yolo County resident, witnessed the 2006 public power battle between the Sacramento Municipal Utility District and PG&E, and said, "There was almost a factor of four between what PG&E was saying and what SMUD was saying and they were both using RCNLD."

"A reviewing court might look at RCNLD but would also look at original cost," Marcus said. "So you’ve got a high end and a low end."

The city would pay an interest rate of between 4.5 to 5.5 percent on revenue bonds, according to Ken Bruce in the Board of Supervisors Budget Analyst’s office. He pointed out that revenue bonds are repaid by dedicated revenue streams that are identified prior to the bond issuance, which can affect the interest rate. "It would be subject to a lot of scrutiny by rating agencies," he said. With this in mind, we used the high end in our analysis, and assumed annual payments at 5.5 percent. If the city buys the system at the price the Board of Equalization and Controller’s Office estimates, and the bonds are repaid over 20 years, the annual cost would be $49.8 million.

CLEANER THAN PG&E


Prop. H sets ambitious standards for renewable energy — but our analysis shows that a city agency could easily afford to increase dramatically its alternative energy portfolio.

Some public power utilities (like private utilities) still rely on dirty coal and large hydropower — but this isn’t true of public power in California. Of the five major public power utilities we surveyed, all except the Los Angeles Department of Water and Power are doing a better job at developing renewables than PG&E.

Just across the Bay, Alameda has enacted a very aggressive renewable-energy plan. "As we go forward, there’s a chance we might be 100 percent renewable if the price is reasonable," Alan Hangar of Alameda Power and Telecom told us. In November, the Alameda city utility will ink two new deals for energy produced at landfills and boost the agency’s percentage of renewables from 55 percent to almost 70. A deal for more hydropower is also in the works.

Hangar said the utility was able to purchase more renewables without raising rates "because we’re tight-fisted. We don’t have a lot of solar because it’s so expensive. But if the price came down we’d look at it."

Even though public power agencies aren’t under the same state mandate of 20 percent renewable by 2010 that investor-owned utilities like PG&E are required to meet, the Sacramento Municipal Utility District set its own renewable power goal — and has already surpassed it. "Being a utility with a board of directors elected by the public, there’s more pressure there to get renewable energy in the mix," said SMUD spokesperson Chris Capra. "The voters here told us they want more solar and green energy." SMUD recently started offering customers solar power from a 1 MW array owned by a private company that sells the power to SMUD. Because the sun is an infinite resource, unlike natural gas, oil, and coal, the utility was able to lock in a long-term affordable rate for the power. "Now we can get solar power to customers who can’t do solar on their own," Capra said.

For calcuutf8g the cost of renewables, we used figures from the city’s Community Choice Aggregation plan. If Prop. H passes, the CCA plan would be implemented as the first step toward the overall goal of 100 percent renewables by 2040.

According to the plan, over the first three years the city would phase in 360 MW of renewable energy, greening 50 percent of our grid. The Board of Supervisors already authorized the use of revenue bonds to finance 150 MW of new wind generation, 31 MW of photovoltaic cells, 72 MW of distributed generation, and 107 MW of enhanced conservation measures. The CCA plan calls for a three-year investment of $129 million for solar and $170 million for wind.

The supervisors have already passed the CCA plan, and it’s been signed by Mayor Gavin Newsom. That legislation authorized $1.2 billion in bonds to finance the plan — more than enough to get the renewable energy ball rolling.

Other financing possibilities exist. For example, PG&E’s energy efficiencies are paid for by a public goods charge levied by the California Public Utilities Commission, which for San Franciscan ratepayers totals $7 million per year. The city-owned system would manage that money instead — and that surcharge is already included in the average rate we calculated.

Furthermore, there are state and federal subsidies that can be applied to renewable energy purchases — these would be given to customers to purchase rooftop solar panels, wind turbines, and other distributed generation that could contribute up to 72 MW of the initial 50 percent in the first phase of the CCA plan. The city already gives $3 million in solar incentives to residents, and this program could be expanded with additional revenue generated from the power business.

We assumed the city could generate a substantial portion of the power it needs from renewables. For the first few years, power would still need to be bought on the spot market; we included those figures in the expense column.

The total costs for operating the system — including operations and maintenance, power purchases, and replacing the taxes that PG&E currently pays to the city: $524.45 million.

THE REVENUE SIDE


But after all the expenses are added up, selling electricity is still a lucrative business. If the city kept power rates at the same level PG&E currently charges — that is, if nobody’s electric bill went up or down at all — the city would clear $214 million a year in surplus revenue from the system. That’s almost as much as the current budget deficit.

Of course, a public power agency — run by accountable public officials — might decide to cut rates instead of banking cash. So we ran a scenario in which the city would cut rates by 15 percent. The bottom line: San Francisco still comes out $107 million ahead.

How can a city agency sell power so much cheaper and still make money?

For starters, PG&E has a guaranteed profit margin of 11.7 percent, approved by the state. A city-owned system doesn’t have to please shareholders with its profit — any surplus here could be folded into the general fund, remain in the San Francisco PUC piggy bank for future infrastructure needs, or be refunded to taxpayers. This is the basic difference between public and private ownership of a utility — and it translates into lower, more stable rates over time.

"For a number of years, we had no rate increases at all," said SMUD’s Chris Capra, who explained that the agency was able to stave off rising natural gas prices because of bulk purchases locked in at low rates. Last year the elected SMUD Board voted for a 7 percent rate increase to cover rising power costs and replace equipment.

The agency’s rates are still far lower than what San Franciscans pay to PG&E — and the private utility has announced it will seek a 6.5 percent rate increase in January.

The budget stalemate never ends

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Folks in Sacramento are telling me that the state may be without a budget for another month or more. Of course, it’s largely due to the fact that California requires a 2/3rds majority to raise taxes — which means a handful of Republicans, who have signed pledges never to raise taxes, can hold the entire state hostage.

Robert at Calitics has a good line on the need for reform — but there’s no way a Constitutional amendment will happen before 2010. So until then, the Democrats are over a barrel, and eventually will probably have to agree to borrow money to cover the deficit — with no new taxes.

The problem is that, whatever the columnists and critics say, the Republicans have no incentive at all to accept a budget that raises taxes — and they have every incentive not to. Thanks in part to skillful Democratic gerrymanders, the GOP districts tend to be very conservative. And any Republican who breaks his or her pledge and agrees to raise taxes will be targeted for extinction.

It’s an ugly situation, and even Schwarzenegger can’t get the members of his party to move an inch.

How bad will it have to get before the public demands reform? Pretty bad.

Editor’s Notes

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› tredmond@sfbg.com

Suppose you don’t care about the war in Iraq. Suppose you have a secure job, and you aren’t in trouble with your mortgage, and don’t spend much time worrying about climate change. You’re thinking about No. 1, and that’s how you plan to vote.

Let me ask you a question:

Who’s more likely to cut your taxes — Barack Obama or John McCain?

If you figure that the heir to the Bush mantra — cut taxes, cut regulation, cut government programs (except for wars) — is the guy who will reduce your tax burden, try again.

I refer you to a very intelligent article by David Leonhardt in the Aug. 24 New York Times Magazine. Leonhardt is not a radical leftist, and he’s not an Obama campaign operative. He’s an economics columnist who has spent a lot of time trying to understand what both of the candidates are really proposing, and here’s his conclusion:

"Obama would not only cut taxes for most people more than McCain would. He would cut them more than Bill Clinton did and more than Hillary Clinton proposed doing."

Obama is offering big middle-class tax cuts, reductions that would actually put a lot more money in the pockets of the people who are most likely to need, and spend, that money. And he’d do it by raising taxes on the very tiny percentage of people who make very high incomes.

McCain loves to talk about tax cuts, but what he has in mind is cutting taxes on the 0.1 percent of earners who have average annual incomes of $9.1 million. Those people would pocket an additional $190,000 a year, which, frankly, would make absolutely no visible difference to their lives or lifestyles.

Obama would raise that group’s taxes by about $800,000 annually — which would also make absolutely no visible difference to their lives or lifestyles. As the Times notes, "The bulk of Obama’s tax increases on the wealthy — about $500,000 of that $800,000 — would simply take away Bush’s tax cuts. The remaining $300,000 wouldn’t nearly reverse their pretax income gains in recent years."

So when it comes to putting more money in your pockets — as the free-marketeers like to say, giving the middle class more cash to spend as it wants, thus stimuutf8g the economy — the Democrat is far, far ahead. And all he’s going to do is put the very rich back where they were a few years ago, which was, well, very rich.

This message isn’t getting out.

Part of the problem is that tax policy is complicated (Jesus, just look at all those numbers in the past few paragraphs); analyzing the competing tax plans can make my head hurt, and I love this stuff. Part of the problem is that the Obama campaign is leery of sounding too populist a note; class warfare makes people like me happy, but it doesn’t tend to win national elections. (Part of the problem is that a large percentage of middle-class Americans seriously believe they’ll be stinking rich someday, which is why lotteries make money.)

But the economy is gong to be the issue that decides this election, and the Democrats have to sell two messages. One, we’re better than the Republicans at managing economic policy (not hard, when you look at how the last GOP chief has handled things). And two, we know you’re hurting (Bill Clinton became president by feeling people’s pain) — and we’re going to make it better.

Do the math: under Obama, around 90 percent of the country would get an immediate raise. That might be worth mentioning in his acceptance speech.

Extra! Hearst blacks out the word progressive

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“Ultra liberal?” “Far left political factions”? In San Francisco? Hearst, Mayoral Press Secretary Nathan Ballard, and an “ultra liberal” supervisorial candidate from the Excelsior District comment on this astounding election development

By Bruce B. Brugmann

Audrey Cooper, assistant metro editor of the Chronicle/Hearst, has admitted that the Chronicle “has decided to stop using the word ‘progressive’ to describe the more liberal of San Francisco’s political factions.” (See my previous blog).

Does this mean that supporters of the Clean Energy Initiative are suddenly and unexpectedly given the derogatory terms “ultra liberal” and “far left.” Does this mean Aaron Peskin and a majority of the board of supervisors? Assemblyman Mark Leno? Former PUC General manager Susan Leal? Former Mayor Art Agnos? A majority of the Democratic County Central Committee? A batch of supervisorial candidates? Labor leaders? The Sierra Club?

Here’s the email Cooper sent me this afternoon responding to questions from the Bruce blog and the Guardian. Cooper, let us stipulate upfront, has one of the toughest jobs going, trying to explain why Hearst suddenly banned the word progressive in the middle of a PG&E offensive against the Clean Energy Act. More: Hearst banned the word progressive in one of the world’s most progressive cities, in a city that spawned the famous progressive Hiram Johnson and his successful fight against the Southern Pacific Railroad, and on the newspaper founded by a publisher who called himself at one time a progressive and ran for mayor of New York on a platform of municipal ownership of utilities. In San Francisco, Hearst campaigned vigorously on a pro-Hetch Hetchy public power, anti-PG&E platform until he reversed himself in the late 1920s because of a PG&E loan from a PG&E-controlled bank. Hearst’s pro-PG&E, anti-public power position has remained in effect to this day. (See previous Bruce blogs, Guardian stories, and David Nasaw’s authoritative biography, “The Chief.”)

Cooper wrote:

“Hi Bruce.
I’m Wyatt Buchanan’s editor — he passed your e-mail along to me. Sorry that it took me a day to get back to you. In general, feel free to ask anything about our coverage. I’ll always answer as quickly as I can (that is, when it’s an issue I have control over).

I’ve also sent versions of this explanation to others who have inquired. (I’m only telling you that in case you get a similar e-mail forwarded to you — it’s just easier for me to explain it the same way to everyone.)

In short, just because a label is embraced by a political group does not mean it’s the best way to report a story. As you’ve probably noticed, we generally eschew political labels when possible. In some stories (such as the fight for the DCCC and Board of Supes), this is not as easily done. In those cases, we choose adjectives we think are as politically neutral as possible.

We decided to stop using the word ‘progressive’ to describe the more liberal of San Francisco’s political factions because it is a politically loaded term that doesn’t mean much to our readers. And while ‘progressive’ may be the preferred term of some politicians — and, of course, they are free to use it to describe themselves — it doesn’t describe where they sit on the traditional political spectrum.

We believe using adjectives such as ‘far left’ and ‘ultra liberal’ more accurately describe city politicians and policies in that broader context.

Thanks for your time. Feel free to call me if you have any questions.

Sincerely,
Audrey”

Reliable sources told us that the mayor’s campaign had complained to the Chronicle about the use of the word progressive and that means Eric Jaye, who runs the Newsom’s gubernatorial campaign at the same time he works for PG&E as a paid consultant to PG&E.

Cooper and Nathan Ballard, the mayor’s press secretary denied this. Cooper said:

“Also, I should tell you that we did not make this change in response or after complaints from anyone in the mayor’s office. The mayor’s office does not dictate what words we use.

“Nobody from the mayor’s office has ever contacted me about this issue as far as I can honestly remember. And I can’t recall them saying anything about it over the last two weeks, either.”

Ballard said:

“Personally I’ve never really complained to the Chronicle about this subject. It just wasn’t very high on my to-do list. In fact I don’t recall ever having any conversations about this topic with anyone from the Chronicle until after Heather Knight’s article about the far-left takeover of the DCCC ran.

“I have to admit that I’m pleased to learn from you that the Chronicle will no longer be using the term ‘progressive’ to describe politicians who aren’t. It always struck me as Orwellian doublespeak to describe somebody who wants to legalize sex trafficking and force lobbyists to wear badges as ‘progressive.'”

Executive Editor Tim Redmond responded to Ballard:

“Well, it’s true that the progressives of the early part of the century tended to be against prostitution and drugs and were prohibitionists, a description that I don’t think would accurately describe, say, Aaron Peskin. But over time the term has evolved, and most progressives today are at least open to the idea that sex work should be legalized. Almost all progressives support the legalization of marijuana (and I think Mayor Newsom does, too.)

“I don’t think far-left even remotely describes people like Peskin, whose economic views are pretty close to the mainstream of the liberal wing of the Democratic Party. Jake McGoldrick clearly isn’t ‘far left.’ I’m not sure even Tom Ammiano could accurately be called ‘far left.’

“I say this as someone who has been called all sorts of names, including Communist, because I advocate higher taxes on the rich and government spending on social services for the poor. At one time, that was pretty much the mainstream opinion of the Democratic Party.

“So who in SF government do you really believe is ‘far left?'”

Ballard responded back to Tim:

“Tim, do us all a favor and count me out of this dorm-room style debate. I never really cared that much whether the Chronicle called these guys progressives, just like I never really cared that much that CW Post calls them Grape Nuts even though they are neither grapes nor nuts.”

George Avalos, a supervisorial candidate in the Excelsior District, also asked Cooper about her designation and sent us her answer and then his comment to her answer. Question: how did Avalos and other progressive candidates in other districts suddenly become “ultra left” and part of a “far left faction?”

Subject: Dude, the preferred nomenclature is . . .

Dear Audrey:

“Thank you for your reply. I was throwing in a little humor here, albeit obscure — a reference to the Big Lebowski.

“Having said that I do believe the Chron’s use of ‘ultra left’ and ‘far left’ is completely biased. After all, who’s the arbiter here about what ‘ultra left’ and ‘far left are?’ What standard are you using and where did it come from? Seems pretty made up to me. Very rarely or better yet, never do I hear progressives talk about themselves in these terms. The Chron’s making it up out of whole cloth.

“It’s unbelievable, that you would even try to justify your use of this language.

“Lastly, if any term is completely meaningless it’s ‘moderate.’ I don’t recall there being a moderate political movement or ideology. A Classical Greek philosophy maybe, but not a political movement like the Progressive Movement. Progressives established labor laws, the women’s right to vote and regulations of our workplaces and food production.

I don’t believe Moderates can claim any such movement or transformation of our government institutions. If there’s something they can champion it’s ameliorating the effects of change or fighting against perennial progressive issues such as single payer health care, taxing high profits and rent control.

Thank you for your response. I really appreciate your sharing with me the Chronicle’s rationale, however shakey it may be.

Sincerely,

John Avalos”

B3 sums up this historic announcement:

So there you have it: a timely snapshot of Hearst double standard ethics: Let Willie Brown do a featured political column on Sunday without disclosing that he is a paid PG&E lobbyist ($200,000 last year alone). Brand all clean energy politicians opposed by PG&E as “ultra liberals” and “far left factions.” And for God’s sake, don’t cover the election in an honest and professional manner and tell us who PG&E is buying off. (See Amanda Witherell story, “PG&E’s blank check, who’s the utility buying off Start with Newsom, Feinstein, and Willie Brown.”) Question: so what will Hearst call the politicians who PG&E buys off? We call Willie PG&E’s Secret Agent Man.

B3, who insists to Cooper he is still a Rock Rapids (Iowa) liberal, and she says she will not challenge it.

The “ultra-liberal” city

19

By Tim Redmond

I don’t know what Heather Knight means by “ultra-liberal,” but to say that the San Francisco Democratic Party has taken a “sharp turn to the left” is a bit miselading. Yes, the progressives ran an agressive campaign and picked up some seats this spring, but most of the votes on most of the issues were pretty close to unanimous; public power, fro example, had support from across the spectrum. Same with most of the supervisors races.

In fact, the only reason the Democratic Party seems a little more progressive now is that it has so often in the past been controlled by moderates (and in the days of Willie Brown, by a political machine).

So what’s up with the “ultra-liberal,” anyway?

I mean, the word “liberal” used to mean someone who believed that government was part of the solution to social problems, that income ought to be redistributed and the weathy should pay their fair share and that taxes levied and collected in a progressive fashion should be used for programs to help the needy.

That describes most of the people the Chron is now calling “ultra-liberal.” It does not describe, for example, Gavin Newsom.

In San Francisco, taking liberal stands on social issues is easy. The economic issues are a lot more tough, and that’s where you can draw political lines. The Shorensteins, Walter and Doug, are (generaly speaking) social liberals who give money to Democrats, and they always have. But when it comes to regulating land use and development and taxing downtown — when it hits the Shorensteins in the pocket book — they’re as anti-tax and anti-regulation as most Republicans.

John Burton asked me once why I didn’t call him a progressive, and I told him that the difference between a liberal and a progressive these days is that progressives don’t trust real-estate developers. That’s just a small example, but it makes the point. The progressives in San Francisco stand for both social and economic justice.

Here’s what I think is going on: The Newsom camp is angry about the use of the term “progressive” to describe Newsom’s critics, because it implies that Newsom somehow isn’t progressive. (Honestly, by any meaning of the word, he’s not. Care not Cash was the opposite of a progressive program. His budget is the opposite of a progressive budget. On economic issues, he’s very much a centrist.)

But Newsom’s operatives have been putting pressure on the media, and I’m sure on the Chron, to change that terminology. So now that Chron has come up with the disparaging term “ultra-liberal.”

Really, based on the recent endorsement, the Democratic Party in SF today pretty closely reflects San Francisco values. The nasty label’s got to go.

And now, the controller’s big lie

0

EDITORIAL Pacific Gas and Electric Co. will get a huge political windfall if the San Francisco Controller’s Office moves forward with a wildly inaccurate estimate of the cost of the Clean Energy Act.

In an Aug. 7 letter sent to the Department of Elections, Controller Ben Rosenfeld wrote that the costs to the city of acquiring PG&E’s local distribution facilities are "likely to be in the billions of dollars." That’s a scary figure, the sort of information PG&E will use to attack the measure. In fact, the company is already sending around flyers calling this a multibillion-dollar proposal.

But it’s completely untrue.

For starters, the Clean Energy Act never mandates that the city buy PG&E’s facilities. The charter amendment, which is on the November ballot, sets aggressive goals for renewable energy and directs city officials to study the best way to achieve those goals. Since public power agencies around the country are leading the way on renewables — and since PG&E has already said it can’t meet even the state’s weak clean energy mandates — the city ought to be looking at taking over the business of selling retail power to residents and businesses. But buying out PG&E’s old system might not be the best way to pursue public power.

But that’s just one flaw in the controller’s reasoning. Because even if San Francisco did buy out PG&E, there would be little or no cost to the city at all.

To understand that, you have to look at the realities of how the measure would work. The Clean Energy Act would authorize the city to issue revenue bonds to buy electric power facilities. Revenue bonds aren’t backed by the taxpayers; they are paid off entirely through a dedicated income stream. So unless the city can prove in advance with a detailed study that buying out PG&E would bring in enough money to cover the costs, there’s no way Wall Street would ever buy the bonds.

In other words, there is no possible scenario under which the Clean Energy Act could cost the city money. The opposite is almost certainly true: public power cities all over the United States make money — often large amounts of money. And our figures have always shown that San Francisco would net millions, maybe hundreds of millions, in revenue from buying out PG&E.

We called Peg Stevenson in the Controller’s Office to ask her about this, and she agreed with us: revenue bonds don’t cost the city any money. Buying out PG&E with revenue bonds wouldn’t cost the city any money. So why does the analysis say the measure could cost billions? "That’s not how I expect people to read it," she said.

But that’s exactly how people will read it. And it’s grossly misleading.

PG&E is already on the attack, and costs will be a huge part of its campaign. In fact, in a July 24 letter to the controller, David Rubin, PG&E’s director of service analysis, argues that the company’s San Francisco system is worth $4.18 billion.

The letter states that PG&E "has not done an inventory of its system" — in other words, the figures Rubin cites are just estimates. And the method PG&E uses to calculate the fair market value of the property is economically and legally dubious, at best.

PG&E insists that the only way to establish a price for the city to pay for a takeover is a method known as "replacement cost new less depreciation." The idea: the city would have to pay the price that it would cost today to replace all of PG&E’s equipment, much of which is old and was purchased (and paid for by the ratepayers) long ago.

The state Board of Equalization, which sets the value of PG&E’s property every year for tax purposes, doesn’t use that method. The board bases its valuation on what’s known as the rate base — the amount of invested capital state regulators allow PG&E to earn a return on. By that standard, the system is worth less than a quarter of what PG&E is claiming (and when tax time rolls around, you can bet the utility isn’t insisting that its property ought to be assessed at a higher value).

Stevenson said the Controller’s Office might replace the term "in the billions of dollars" with a more specific figure. If that’s the case, taking PG&E’s word, and accepting the wildly inflated $4.18 billion figure, would be a clear violation of the public trust.

The Controller’s Office needs to change its statement to reflect, at the very least, the fact that no city money is at risk and that there’s a reasonable assumption that the end result of a public takeover of PG&E would be increased revenue. It should say: "The costs of purchasing or building energy facilities would be substantial — but those costs would be covered entirely by the revenue from operating the facilities. The net cost to the city would, at worst, be minimal and the potential exists for the city to bring in significant new revenue to offset taxes and general fund expenses."

That, at least, is a true and accurate statement.

PS: The supervisors should hold hearings on the economics of this measure and demonstrate how lucrative public power is for cities — and how cheap for ratepayers. Public power is cheaper. Two charts below (PDF) show how public power is consistently less expensive than PG&E’s private power. The first one looks at utilities in California; note that SMUD, the Sacramento Municipal Utility District, has significantly lower rates than PG&E. The second one, from the American Public Power Association, shows overall rates for public and private utilities state by state.

The relevant line shows public, private and co-op rates, average per kilowatt-hour. Note that public power in California is about one-third cheaper overall.

California ……………….10.9…….15.3……..11.5

www.scppa.org/Downloads/Rates/chart1.pdf

http://appanet.org/wp-content/uploads/sites/2/PDFs/utilityratecompstate2006.pdf

PPS: We’ve seen these shenanigans from the Controller’s Office for years; see our 1982 story (PDF) on how PG&E forced a misleading statement onto the ballot.

And now, the controller’s big lie

6

By Bruce B. Brugmann (Scroll down for links to our current editorial on PG&E shenanigans on the Clean Energy Act initiative and a similar l982 Guardian story on PG&E shenanigans on the public power initiative of that era)

To repeat: When PG&E spits, City Hall swims.

In September of l982, public power forces placed Proposition K on the ballot, an initiative that would authorize a city study of the feasibility of municipalizing PG&E’s electric distribution system in San Francisco.

The Guardian headlines told the emerging story of the standard PG&E response whenever its illegal monopoly in San Francisco is threatened.

Front page: “Uncovered! PG&E’s inside moves at City Hall to squash public power: To subvert Prop. K, the utility sets up a front group, circulates a secret poll and recruits Feinstein, Kopp, Molinari and the city controller and city attorney.” (Feinstein was the mayor and Kopp and Molilnari were powerful supervisors. This time around, PG&E won’t have that luxury of public officials falling over themselves to run their errands and they have been forced to scramble for political support as never before.)

The head on our inside story: “PG&E attempts a coup against public power in San Francisco, The controller puts a misleading, one-sided and apparently illegal $1.4 billion cost-estimate for Prop. K in the voters’ handbook–using PG&E’s numbers.” The story pointed out that the data submitted by the controller for the handbook was originally supplied by a PG&E attorney and a City Hall lobbyist for PG&E. And the controller never bothered to talk to the public power group nor do any independent investigation of his own. Why? The big PG&E Lie ran in the controller’s statement in the voters’ handbook and was a major factor in PG&E’s victory over the public power initiative. PG&E’s major campaign theme, then and now, is the relentlessly repeated argument, “too risky, too costly.”

Today, as our current editorial discloses, the situation is much the same in the controller’s office.
Controller Ben Rosenfeld wrote in an Aug. 7 letter to the Department of Elections for the voters’ handbook that the costs to the city of acquiring PG&E’s local distribution facilities are “likely to be in the billions of dollars.”
What’s his evidence for this astounding figure? The only evidence is a July 24 letter to the controller from David Rubin, PG&E’s director of service analysis, who argues that the company’s San Francisco system is worth $4.18 billion.

Once again, the controller took PG&E’s word without gulping. He didn’t check with the public power people. He didn’t check with the state Board of Equalization, which sets a much lower value on PG&E property (which PG&E doesn’t protest at tax time.) He didn’t do his own research. He misinterpreted the initiative (which provides for revenue bonds, which would be paid off through a dedicated income stream and thus would cost the city nothing.) And he didn’t discuss revenue (public power cities have cheaper power and lower rates than PG&E and they make gobs of money). In short, public power in San Francisco, with its own power source at the Hetch Hetchy dam, is the biggest potential source of new revenue for the city. Again, why didn’t the controller do normal due diligence and research on such a vitally important issue for a cash-strapped city? Why is the controller once again so slavishly buying the PG&E Lie and propaganda line? The public deserves an explanation.

Sups. Ross Mirkarimi and Aaron Peskin, authors of the measure, and the clean energy forces are working hard to get PG&E out of the controller’s proposed ballot information and get some honesty in. Our suggested language: “The costs of purchasing or building energy facilities would be substantial–but those costs would be covered entirely by the revenue from operating the facilities. The net cost for the city would, at worst, be minimal and the potential exists for the city to bring in significant new revenue to offset taxes and general fund expenses.”

Let’s kick PG&E out of the controller’s office. Let’s kick PG&E out of City Hall. B3

Click here to read this week’s editorial And now, the controller’s big lie.

Click here to read a similar Guardian story from Sept, 1982, outlining PG&E’s mode of attack on a public power initiative

Don’t let PG&E screw you!

2

An open letter to the small business community

I was astounded to see that once again some small business organizations, and leaders, are about to put an argument on the November ballot that retails without blushing the PG&E lies and propaganda line against the Clean Energy Act and does not represent the views of many of us in the small business community.

As you can see from my recent blog, the current Guardian editorial, and our stories and editorials since l969, PG&E screws our small businesses and residents in many ways: high rates ( much higher than public power cities), frequent blackouts, lousy service, unaccountability, and a propensity to cut off power or force small businesses to buy an expensive bond if they are late on payments. And there’s no way to effectively complain about PG&E’s terrible service, rates, and glacial moves toward renewable energy.

Most embarrassing of all, the ballot argument retails the big PG&E Lie: the erroneous whopper that the cost to the city of acquiring PG&E’s local distribution system would be $4 billion. For starters, the Clean Energy Act never mandates that the city buy PG&E’s aging facilities. The charter amendment sets aggressive goals for renewable energy and directs city officials to study the best way to achieve those goals.

Since public power agencies around the country are leading the way on renewables, and since PG&E has already said it can’t meet even the state’s weak clean energy mandates, the city ought to be looking at taking over the business of selling retail power to businesses and residents. But buying out PG&E’s old system might not be the best way.

More: even if San Francisco did buy out PG&E, there would be little or no cost to the city at all. The act would authorize the city to issue revenue bonds to buy electric power facilities. Unlike typical general obligation bonds, the revenue bonds would not be backed by taxpayers, and would be repaid by the money the city would make by selling retail electricity. Revenue bonds are paid off entirely through a dedicated revenue stream. So unless the city can prove in advance with a detailed study that buying out PG&E would bring in enough money to cover costs, there’s no way Wall Street would ever buy the bonds.

In short, there is no possible scenario under which the Act could cost money. The opposite is true: Public power cities all over the United States make money, including the public power system in my hometown of
Rock Rapids, Iowa, which has had a successful public power system since 1896. Many public power systems
make large amounts of money while keeping rates well below private power rates. And our figures show that San Francisco would net millions, maybe hundreds of millions of dollars, in revenue from buying out PG&E.
Moreover, PG&E each year yanks upwards of $650 million out of the city with its high rates, according to our study.

So why are some small business leaders once again buying PG&E’s Big Lies and once again trying to get small business groups and businesses to sign a ballot argument that undermines their own economic self interest? Would any of them run their own businesses this way? Small business people should steer clear of this embarrassing, self-immolating argument and either support the Clean Energy Initiative or stay neutral.

Most important, the business of PG&E Lies is academic. Because of the federal Raker Act giving San Francisco an unprecedented concession to dam a beautiful valley (Hetch Hetchy) in a beautiful national park (Yosemite), San Francisco is the only city in the U.S. mandated by federal law and a U.S. Supreme Court decision to have a public power system. And the longer the city is in violation of the Raker Act (because it does not have a public power system), the more vulnerable the city is to the tear-down-the-dam movement quietly orchestrated by PG&E and its allies. And that would be a costly catastrophe.

Meanwhile, the supervisors should hold hearings on the economics of this measure and demonstrate how lucrative public power is for cities–and how cheap for businesses and residents. They should also invite small business people to testify about their problems with PG&E. We’re posting charts at SFBG.com that show that in California and throughout the U.S., public power is less expensive than private power across the board. B3

P.S. We are doing a major story on how PG&E screws local small business on many levels. If you have specifics and examples with your business, or know of any, please let us know at the Guardian. On guard, B3, who watched today from my office window as the fumes curled up from the Potrero Hill power plant, courtesy of PG&E

*PAID BALLOT ARGUMENT LANGUAGE

Proposition ___ Will Hurt San Francisco Small Business Owners

The Board of Supervisor’s plan to takeover PG&E would force San Franciscans to pay an estimated $4 billion for the power system through a dramatic increase in monthly utility bills. If Proposition___ passes the City would lose the more than $20 million a year that PG&E pays in taxes and fees. That means our taxes would need to go up to pay for this lost revenue or basic services, like libraries, street cleaning, police and fire services. It will cost more to do business in San Francisco as small business owners and their families will face an additional $400 to $600 a year expense in utility bills.

Join San Francisco ‘s Small Business Community in Voting No on Proposition___

The flak over Newsom’s hack

1

The word that Gavin Newsom is taking to campaign consultant Garry South is suddenly big talk on the blogs.

It started that way a growing number of political stories are starting these days, with an enterprising blogger catching someone in what was supposed to be a private meeting. In this case, Zuma Dogg of Los Angeles spied Gavin Newsom at a Starbucks (with his SUV parked in a fire lane) chatting with the prominent (and notorious) South.

Now Newsom is getting denounced on Calitics and is facing an (admittedly insider) threat that some progressives may abandon him as he moves to the political center.

A couple of thoughts on this.

1. Garry South isn’t running Newsom’s campaign. That’s still the job of Eric Jaye. In fact, Jaye tells me that South hasn’t been hired yet: “We’re taling to him,” Jaye said. “We’re putting together a team. But nobody’s been hired yet.” Not saying that Jaye is going to advise against a move to the center or anything, but if South does come on, it will be as a senior advisor.

2. I get the problems with Garry South, and I’m not defending him here, but anyone who thinks Newsom will run for governor as a San Francisco progressive hasn’t been paying attention to the mayor’s history and career. He ran for mayor the first time as a pro-business moderate, and that’s how he’ll run for governor. He won’t deny promoting same-sex marriage (which, frankly, won’t be a big issue in the Democratic primary anyway and can only help him) and will try to be an environmentalist (isn’t everyone these days?), but he won’t be talking about raising taxes on the rich. Isn’t going to happen.

3. What this really means is that Newsom’s “exploratory” campaign is getting a little less exploratory and a little more serious. No doubt Jaye has been doing polls to see if Newsom’s record would fly in a statewide race, and no doubt he’s found that his man can be sold to the voters will the proper packaging. And now Team Newsom is getting into gear. Even Jaye admitted that “the exploratory campaign is stepping up its efforts.”

So look for Newsom to pay even less attention to City Hall and even more to vote-rich Southern California in the next few months.

Arnold’s tax flip: Spare the rich, tax the poor

0

Faced with an overdue state budget that is simply not going to be balanced by spending cuts alone, Gov. Arnold Schwarzenegger has commendably reversed his longtime pledge of “no new taxes.” Unfortunately, he did so by choosing the most regressive form of taxes: a one-cent sales tax hike that would hit the poor far harder than the rich.
Compare that to the budget plan worked out in the California Assembly (with the help of our own Assembly member Mark Leno), which Leno said would “restore $8 billion in the most draconian cuts that the governor proposed.” How? By increasing income taxes on the wealthiest Californians, a plan that would raise about $8.2 billion per year, roughly double what the governor’s sales tax proposal would bring in.
So the Democrats want to tax the rich (who would write the increase off of their federal income taxes anyway and end up paying about the same) and Schwarzenegger wants to tax the poor. But it all may be a moot point considering it takes a few GOP legislators to reach the two-third threshold for passing a budget and all the Republican legislators have signed on to an inane “no new taxes” pledge, apparently content to just starve state government.
Stay tuned…

Letters

0

PARTY PROMOTERS


The following two comments appeared with a July 21 posting to SFBG’s Politics blog, "DCCC vote: Does Peskin have it?"

We need a strong leader in our local Democratic Party that will call out our elected leaders on their BS. For example, [Nancy] Pelosi and her continued "do nothing but throw more monies at the war" approach. I have sat by and watched the DCCC leaders do nothing but carry the party line toward the right. It’s time for a change and to bring our party back to the left. Chris Daly would be the best one to make that happen, but unfortunately he is backing Peskin for that. I trust Chris, so I will have to go along with it for now. In 2010 you will have a chance to put your name on the next DCCC race if you don’t like how things are going.

Jerry Jarvis

Sup. Daly, never a fan of your brand of politics. I believe that San Franciscans will for years be harmed if your friend and colleague Sup. Peskin is elected chair of DCCC.

You will see my letter in this week’s Bay Area Reporter quoting both you and Mr. Peskin on your intent to change the way things are done on the DCCC and how you’re being termed off the Board of Supervisors seems to have energized you to find new ways to continue legisutf8g from beyond City Hall.

I fear for everyday San Franciscans, I fear for your children, I fear for businesses (who will pay taxes to support all that you and Sup. Peskin want to do?), and I fear for the survival of a united San Francisco.

Similar to the recent Leno vs. Migden race, I am deeply dismayed at the vitriol and partisan nature this race has taken.

Mark Murphy

WHAT IS JEWISH MUSIC?


The following comment appeared with a July 15 posting to SFBG’s Noise blog, "Shining a light on Diamond Days ’08 music fest."

Heeb magazine repeatedly demonstrates that it is pretty clueless when it comes to Jewish culture outside of a narrow set of tired shticks. When [publisher Josh] Neuman comments that "Jewish music" is "a murky moniker that generally signifies some sort of backwards gaze at a mythical, ‘authentic’ past," he’s demonstrating that he has no idea what’s going on in the Jewish music scene. Jewish music has never been so forward-looking as it is now. There are artists all over the country (and world) exploring what Jewish music can become. They are, with no more lofty goal than making great music, creating a new American Jewish culture that is as vibrant as anything that has come before. But Heeb hasn’t noticed and isn’t interested. In Heeb‘s world, being Jewish is nothing more than wearing a hip "tribe" T-shirt while laughing at your grandparents. Who’s looking backward?

Jack Zaint

The Guardian welcomes letters commenting on our coverage or other topics of local interest. Letters should be brief (we reserve the right to edit them for length) and signed. Please include a daytime telephone number for verification.

Corrections and clarifications: The Guardian tries to report news fairly and accurately. You are invited to complain to us when you think we have fallen short of that objective. Complaints should be directed to Paula Connelly, the assistant to the publisher. We’d prefer them in writing, but Connelly can also be reached by phone at (415) 255-3100. If we have published a misstatement, we will endeavor to correct it quickly and in an appropriate place in the newspaper. If you remain dissatisfied, we invite you to contact the Minnesota News Council, an impartial organization that hears and considers complaints against news media. It can be reached at 12 South Sixth St., Suite 1122, Minneapolis MN 55402; (612) 341-9357; fax (612) 341-9358.

Campaign pain?

0

› a&eletters@sfbg.com

November’s presidential election already looms on the horizon like a herpes outbreak, promising nothing so much as a painful, shame-filled denouement to a drunken and ill-conceived flirtation with someone you thought you knew. So it’s refreshing that the San Francisco Mime Troupe’s seasonal offering of free, rabble-rousing political theater is an election-year special in which the opposing candidates from the two monopolizing parties are conspicuously absent. Instead, Red State, which opened by tradition July 4 in Dolores Park, focuses on the screwed-if-you-do/screwed-if-you-don’t quandary of voting itself, and does so with populist gusto tinged with a reddish hue — a thematic color imbuing everything from the design scheme to the pointedly funny dialogue’s New Deal–style social-democratic slant. It also reflects the rising blood pressure that results from underlying but palpable frustration and outrage.

Reclaiming red from the dusty color wheel of history, Mime Troupe head writer Michael Gene Sullivan’s smart and consistently funny script — brilliantly delivered by a uniformly sharp and charismatic cast and fueled by composer–band leader Pat Moran’s eclectic set of apt and catchy songs — posits FDR’s small-town America as marooned at Francis Fukuyama’s end of history. Set in a puny Kansas ‘burb named Bluebird, Red State casts November’s "Countdown to Armageddon" (as the play’s CNN reporter colorfully advertises his network’s election coverage) in the screwball style of Depression-era comedies as Bluebird becomes the unlikely tiebreaker in an electoral dead heat.

Suddenly the nation’s eyes are riveted on an otherwise microscopic microcosm of average American life at the beginning of the 21st century. This focus on the lives of the town’s humble and much abused citizens throws everyone for a loop, not least the government’s smarmy and ambitious election official (Velina Brown), who is so obsessed with thoughts of a cush Washington, DC-based promotion that she has difficulty remembering which state she’s even in.

For its part, Bluebird feels like a town under siege, but just who the enemy is remains initially hard for the inhabitants to fathom, or agree on, anyway. Is it the wrath of God? The communists? It all depends on whom you ask among the locals, a population whose representative eccentrics include a God-fearing, Jesus-toting fundamentalist (Noah James Butler, bearing cross and life-size Christ) and a rabid (and equally anachronistic) anticommunist named Eugene (Robert Ernst).

What is clear enough is that jobs have dried up (the local pencil factory — the onetime pride of the town, which liked to promote itself as "the Number 2 pencil capital of North Central Kansas" — just relocated to the cheap labor environs of Uzbekistan), public services have dwindled to nil, and the dilapidated sidewalks and roads are a physical menace (nearly undoing a local soldier, played by Adrian C. Mejia, who’s just returned in one piece from Afghanistan).

If that wasn’t enough, the town’s only electronic voting machine is on the fritz. But this little debacle, in the context of an electoral tie, ends up being an opportunity that gets the town thinking and the earth trembling beneath Washington, DC. Deciding to withhold their votes until the proper share of their tax dollars gets re-diverted back to their community where it belongs, and away from endless war-making and corporate welfare, Bluebird manages (in the most unlikely but coruscating of Capra-esque scenarios) to hold a corrupt and hubristic system at bay, spotlighting the government–big business alliance that for decades has fleeced towns like Bluebird of their taxes, able-bodied military-age youth, and everything else not nailed down. Or so to speak: before the town turns the tables on the system, even Bluebird’s fundamentalist is driven in desperation to ask the Antiques Roadshow host, "How much for Jeezus?"

RED STATE

Through Sept 28, free

Various Northern California locations

Visit www.sfmt.org for schedule

Red ink stains green rhetoric

0

› news@sfbg.com

GREEN CITY Environmentalists are pondering the state’s seemingly schizophrenic approach to fighting climate change after a recent state report encouraging increased use of mass transit came out at the same time that the governor’s budget proposal denies the state’s public transportation fund more than $1 billion.

The California Air Resource Board’s June 26 Draft Scoping Plan to combat global warming, released pursuant to Assembly Bill 32, the California Global Warming Solutions Act of 2006, is at least the second major report this year to recommend expanding public transit. But the governor’s latest spending plan redirects that sizeable chunk of money — gasoline tax revenue that voters who approved Prop. 42 in 2002 directed toward transportation projects and agencies — to help reduce the state’s $17 billion budget deficit.

"There’s a lot of misallocation of resources going on," said Tom Radulovich, executive director of the San Francisco nonprofit Livable Cities. "The governor on the one hand wants to say, ‘You should all ride mass transit.’ But on the other hand, he is taking away [transit] support from the state budget."

The governor’s press secretary, Aaron McLear, said the budget proposal spares transit from cuts faced by other programs during these tough economic times.

"Funding for public transportation stays level in the governor’s budget proposal. That’s in the face of a $17 billion deficit. The fact that it remains level is better than a lot of cuts we’ve had to make," McLear said. "We wish we could increase it, because it certainly is something the governor believes in. But again, the state is facing a $17 billion shortfall. We can only spend the money that we have. There will have to be some tough decisions to be made."

The CARB plan calls for California to lead by example by encouraging state employees to take advantage of public transportation during their commutes. It notes that transportation accounts for 38 percent of California’s greenhouse gas emissions, most of which comes from cars and trucks, and that curbing these emissions is critical to reaching California’s goal of reducing total emissions by 30 percent over the next 12 years.

"Overall I think this is headed in the right direction. For better or worse, this really does put California ahead of any other state if we fully implement this plan. Of course, having a good plan does not guarantee that it will be implemented, but this is a very serious attempt," said Gabriel Metcalf, executive director of the San Francisco Planning and Urban Research Association, of the state’s global warming plan.

Yet he also said that reaching the plan’s ambitious goals for reducing greenhouse gases means people will have to drive less and use transit more, and that local governments will need to stop approving urban sprawl projects.

"The easy answer that most Americans would rather have is to keep driving just as much as always, but have alternative fuels. And that just is not going to work. AB 32 has a major land use change component. Is it enough? No, it is not. But it is at least an acknowledgment of what we have to do," Metcalf said. "Overall I’m pretty impressed, but they’re not proposing enough land use change and they’re not proposing transit funding increases. They are still unwilling to face facts about the role of the automobile and climate change."

Yet instead of increasing funds for mass transit, the governor has redirected billions of public transportation dollars into the general fund, maintaining status quo transit funding in the face of increased gasoline prices and the new climate change mandate. At the same time, billions of dollars have been allocated to highway expansion programs, exacerbating the global warming problem.

"Anybody’s budget should be a reflection of their values, whether it’s an individual or an agency," said Carli Paine, transportation program director for the Transportation and Land Use Coalition. "The state is saying, ‘We value public transportation as a climate friendly choice.’ Yet when it comes to expressing those values in the budget, we say, ‘It doesn’t matter that much,’ so we’re actually undermining those original statements."

The governor’s revised state budget allocated $306 million to the State Transit Assistance Program, the state’s source of funding for mass transit operating costs such as maintenance, drivers, fuel, and mechanics.

This is the same amount that was allocated last year, even though transit ridership is the highest it has been in more than 50 years, according to a June report by the American Public Transportation Association. And factor in that crude oil is about $140 per barrel now compared to about $73 per barrel this time in 2007, according to the Energy Information Administration, a federal agency. "The budget is kicking transit in the teeth when it needs it [money] the most," Radulovich said.

The $306 million allocated to the State Transit Assistance Program comes from funds generated by Prop. 42, the voter-approved gasoline tax measure. But Paine said the STAP should also be entitled to what is called "spillover" money. Spillover refers to additional funds generated when the price of gas rises faster than inflation on other goods, leading to unusually high revenue from the tax.

The governor’s budget predicts $1.77 billion in spillover for the 2008–09 fiscal year, but he decided to put the money toward shrinking the deficit instead of funding public transportation. The current fiscal year was the first time since the proposition passed that the spillover did not go toward public transportation.

Radulovich said he believes the state is hesitant to fund mass transit — even though it recognizes the importance of reducing the number of cars on the road — because building more roads and freeways leads to more expansion and urban sprawl.

"Sprawl makes a lot of people a lot of money," he said, including oil companies, car companies, homebuilders, construction firms, and trucking companies. "These are political questions, not policy questions. The policy answers in many ways are very clear. The question is whether there is the political will to deal with it, and that’s what we’re going to find out."

Radulovich said this reality is why many California business groups support outward expansion and put pressure on the government to fund highways over mass transit. The Bay Area Council, for example, pushed aggressively for highway expansion during the last budget cycle.

Paine said she believes political pressure also comes from structural flaws in the state’s budget system.

"It’s the legacy of Prop. 13, which really froze the income our state received from [property] taxes," she said. "Public entities that are committed to social services, such as education, are still receiving property taxes at levels that are decades behind what they used to be." This puts a strain on the state’s general fund, and money has to be diverted from the mass transit account to relieve the burden generated by California’s low income tax levels, Paine explained.

Paine said a new budget proposal has been submitted to the California legislature that would restore hundreds of millions of dollars to the mass transit account for the 2008-09 fiscal year by generating additional revenue for the general fund. She said that since 2000, more than $3 billion of mass transit money has been redirected to the general fund, and the number will exceed $4 billion if the governor’s current proposal goes through.

"This isn’t just a problem this year — it’s a chronic problem. And public transportation is chronically being leaned on for relief," she said. "It’s just not a sustainable system."

TRANSIT FUNDING 101

Carli Paine of the Transportation and Land Use Coalition explained the finer points of California’s complicated system for funding — or not funding — improvements to the public transit system. Transit’s main account is called the State Transit Assistance Program. This money is flexible, but is mostly used for transit operations (maintenance, operations, fuel, mechanics, drivers, and so forth). Sometimes, though, it is used for capital projects (such as buying new tracks or replacement cars).

The STAP is the largest portion of the public transportation account, and the funding is critical. As Paine put it, "If you can’t even operate the system that you have, it doesn’t help much to have money to lay new tracks." The STAP is therefore often the focus of discussions about transit funding.

Prop. 42, which directs California’s gas tax to transportation projects, funds the STAP, although not all Prop. 42 money goes there. For example, 25 percent of Prop. 42 revenue goes to a special account for transit capital projects.

Prop. 1B is another big source of transit funding. It is the 2006 measure that allowed California to sell $19.9 billion worth of bonds to fund transportation programs. Only about $4 billion of that was allocated to public transportation, with the lion’s share of the money going toward new freeway projects.

This is where things get a little complicated.

California originally had a sales tax on all goods except gasoline. In the 1970s, voters passed Prop. 42, which decided that it would be more equitable to reduce the sales tax rate by a fraction of a percentage point, but expand the sales tax to include gasoline.

This was expected to be revenue-neutral for the state, so it wouldn’t cost people more. That was true unless gas prices rose quicker than the cost of all goods, which it eventually did.

Then-Gov. Ronald Reagan argued that it was important to return the extra revenue to public transportation because when gas prices rise, more people use public transit. As a result, this "spillover" has been set aside for transit expansion.

Last year was the first year in which the spillover was diverted to the general fund instead of being given to the STAP. It was redirected to help close the state deficit, and the 2008–09 budget proposes doing the same thing this fiscal year. (Janna Brancolini)

I’m for PG&E, at 50 bucks a head

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If public power can work in Rock Rapids, Iowa, why can’t it work in San Francisco?

By Bruce B. Brugmann

When I came into yesterday’s public hearing at City hall on the emerging clean energy act initiative, I wasn’t surprised to see the room stacked with people obviously rounded up by PG&E for the occasion. After 42 years of covering PG&E, I know how private utility operates.

I asked the man sitting next to me, obviously not a
City Hall regular, why he was attending the hearing. His answer was vague but he was obviously agitated about the clean energy act initiative. Was he going to testify against the initiative? Yes, he said. Was he paid to attend the hearing?
He mumbled a bit and then said, yes, $50 bucks. But, he pointed out, he hadn’t been paid yet.

The word got around the hearing room that PG&E’s going rate for this hearing was $50. Julian Davis, the chair of the clean energy campaign, was first up to testify and promptly mentioned the going rate.
He then said that he considered it “cynical and tragic” for a corporation like PG&E to take advantage of communities of color into advocating on behalf of an agenda that ultimately does not serve their interests. (Many of the members of the audience were persons of color. Davis is black.)

Many of them testified, arguing that the initiative, which calls for setting renewable energy goals and making San Francisco the nation’s greenest clean energy city, would be too expensive and burdensome and ought to be killed forthwith. They testified that they couldn’t afford higher electric rates, higher taxes, higher anything in the city’s tight economy. Several said they were living on fixed incomes and simply could not afford another penny on anything.

Sup. Ross Mirkarimi, sponsor of the bill, and Sup. Chris Daly, chair of the rules committee meeting, Sup. Bevin Dufty, and many pro-clean energy speakers pointed out the many advantages of clean energy and public power. Cities with public power across the state and country had lower electric rates, better service, and extra money for their general funds. The Sacramento Municipal Utility District (SMUD) is a national leader in renewable energy and conservation efforts, while still keeping its rates far below PG&E rates in adjoining communities.

After hearing the clean energy speakers, several people came up to Davis after the hearing and said they were confused and annoyed that they had been misled by PG&E. They were interested in the arguments for clean energy and the initiative and wanted to know more.

Davis said he told them, among other things, that “one of the essential components of the clean energy act is a mandate to offer the kind of jobs and job training in the clean energy industry that PG&E is not currently offering to the very communities they are willing to exploit to promote their status quo agenda.” The jobs idea was of particular interest, he said.

And, yes, I testified at the hearing. I sometimes do this to counter the time worn PG&E line that, gosh, golly, gee, electricity is so complicated, city workers are so lazy, dumb, and incompetent, how in the world can they run an electrical company if they can’t make the muni run on time. Wheeze, wheeze, and wheeze again.

And so I pointed out that in my hometown of Rock Rapids, Iowa, population 2,800, a bedrock conservative Republican farming community way out in the northwestern part of the state,
the town has successfully operated a public utility since l896, and it’s doing just fine. It provides good, reliable, hometown electricity, has good low rates and excellent service, makes money for the general fund and subsidizes projects such as the local swimming pool, and doesn’t gratuitously cut off service with no way to appeal or complain, as is PG&E policy. And the public utility is locally accountable to a local board of directors composed of local townsfolk, such as my old friends Dave Foltz, a local real estate man, and Eugene Metzger, a local banker.

To this day, I told the supervisors, II always carry in my pocket a little blue coin purse that eloquently makes the local point. And I pulled the purse out of my pocket and read the inscription to the supervisors: “Call before you dig, Rock Rapids Municipal Utilities, (7l2) 472-2513.)”

And so my central argument is unbeatable: If public power works in Rock Rapids, Iowa, why can’t it work in San Francisco, California? PG&E has yet to get back to me on this one. Meanwhile, I’ll keep you posted throughout the campaign on public power in Rock Rapids. On guard, stay plugged in for the duration, the fun has just started, B3

The dirty fight over clean power

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› amanda@sfbg.com

A charter amendment for renewable energy and public power appears headed for the November ballot, and already Pacific Gas and Electric Co. is rounding up front groups and touting inaccurate figures in an attempt to scuttle the plan.

The San Francisco Clean Energy Act, introduced by Sup. Ross Mirkarimi, would mandate that the San Francisco Public Utilities Commission "produce a comprehensive plan for providing clean, secure, cost-effective electricity for city departments and residents and businesses."

If passed, San Francisco would exceed state standards by requiring 51 percent clean, renewable energy by 2017; 75 percent by 2030; and 100 percent by 2040. Workforce development is also part of the plan, and if it’s determined that public ownership of the grid is the way to go, any employees fired by PG&E will be hired by the SFPUC.

"The San Francisco Board of Supervisors is talking about taking over PG&E," Brandon Hernandez, the corporation’s manager of government relations, said at a June 27 Rules Committee hearing on the legislation. "PG&E’s system is not for sale," he asserted. He then went on to say a takeover would cost the city "at least $4 billion."

PG&E spokesperson Darlene Chiu told the Guardian: "That’s our estimate for what our system costs in San Francisco."

But the California State Board of Equalization says all of PG&E’s state-assessed San Francisco property was worth $1.2 billion in 2007. The board’s appraisers assess PG&E’s property for tax purposes and their final figure includes millions of dollars of property that San Francisco would not want to own.

PG&E threw other punches at the city. Hernandez threatened the loss of as much as $29 million per year in taxes and charitable giving. "We no longer will be contributing to San Francisco’s nonprofits and service organizations," he said of groups that received $5 million from PG&E last year.

That money buys some political loyalty. The only organizations that spoke against the measure — the San Francisco Chamber of Commerce, the Bay Area Council, and the A. Phillip Randolph Institute — all received bucks deluxe from PG&E. Between 2004 and 2006, the Chamber of Commerce Foundation received $166,000 from the utility; the Bay Area Council and Economic Forum grossed $132,500; and APRI banked slightly more than $100,000.

The Chamber’s vice president of public policy, Rob Black, criticized the move toward municipalization because it would make San Francisco, like other municipal utilities, exempt from the state-mandated 20 percent renewable energy by 2010. "The Los Angeles utility is at 48 percent coal. That’s not green, that’s not renewable. That’s something we need to be very careful about," he told the committee.

According to the Los Angeles Department of Water and Power, their power mix is actually 44 percent coal. But Black didn’t bother to check; he just took his figures from PG&E moments before, while conferring with Hernandez and Chiu. When questioned by the Guardian, Black said, "They didn’t come to me. I went to them."

He reiterated the concern that municipally-owned power isn’t required by the state to be clean and green, and becoming so could increase rates. "If we’re creating cheaper energy, where’s the incentive to do conservation?" he asked.

According to statistics from the meeting, the average PG&E household spends $74.55 per month on electricity, with 12 percent of the energy used hailing from renewable resources. An equivalent customer in the Sacramento Municipal Utility District has a bill of $46.60 for 18 percent renewable.

APRI’s James Bryant said his Bayview community group has issues with the costs and the idea that former PG&E employees would be hired by the city and subsequently receive worse retirement plans.

When asked if he was there because his organization gets money from PG&E, Bryant said, "Not really." He added, "I don’t have anything to do with their decisions. They don’t have anything to do with my decisions.

"Of all the amoral things PG&E does, they fund very worthy grassroots organizations and then lean on them to speak against things," Sup. Tom Ammiano said when expressing his support for the legislation. "Not only is San Francisco going to have public power, the state of California is going to have public power."

Other public comments overwhelmingly supported the measure. Some energy activists have been concerned that the legislation would derail or delay efforts to move toward renewables through the community choice aggregation (CCA) program.

MUD money

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Originally published October 10, 2001 A San Francisco public power agency could buy out Pacific Gas and Electric Co., cut residential electricity rates by 20 percent, dramatically reduce the city’s reliance on fossil fuels – and still operate with a $18 million annual surplus, a Bay Guardian analysis shows. Our study’s figures directly contradict the argument that’s at the heart of PG&E’s campaign against public power: they show that a municipal electrical system can be bought and run at no cost to the taxpayers – with plenty of money left over. Our figures are all taken from public sources and are consistent with the financial reports of other major public power agencies in the state. In fact, if anything, our figures are conservative; the real benefits are almost certainly higher. The financial issues are essentially the same for a municipal utility district and for a city power agency, so our figures would apply to either the MUD, which would be created under Measure I, or the Water and Power Agency, which would be created under Proposition F. Calcuutf8g the financial feasibility of a municipal utility district or city power agency in detail is a complex process. Consultants typically charge upward of $1 million for detailed feasibility studies that use all sorts of models and assumptions to come up with the sorts of figures you can take to the bank (or to Wall Street to sell bonds). So our analysis isn’t anywhere near as detailed as what the MUD or the WPA will eventually have to produce. But we’ve covered all of the major revenues and costs; if we’re missing anything, it won’t radically change the bottom line. And it’s safe to say that we haven’t over<\h>estimated the financial viability of public power. The questions on the minds of most voters this fall are relatively simple: Can public power pay for itself? Will the MUD or the Water and Power Agency be a financial success? And our research shows that the answer is a resounding yes. We’ve run through two scenarios, a worst-case scenario and a best-case scenario. In each case, we’ve found, a San Francisco public power agency is more than financially viable. Our study is the rough equivalent of what a MUD’s or WPA’s annual energy report to the public would look like once the agency was up and running. In fact, we’ve pretty much followed the model of the Sacramento Municipal Utility District (SMUD) and the Los Angeles Department of Water and Power (LADWP), and we’ve relied on those two agencies’ figures to estimate some of what the city’s comparable costs would be. We’ve discussed our study with Ed Smeloff, the city’s top energy expert, and while he couldn’t verify our conclusions (since he hasn’t run the numbers himself), he said that there were no major costs that we had ignored. The results are summarized in the two accompanying charts. Where’s the money? Based on how other MUDs have been set up, the process in San Francisco would look something like this: The elected MUD (or WPA) directors would commission a detailed feasibility study outlining the financial future of the agency. Then they would begin negotiations with PG&E to buy the company’s local transmission and distribution system. If PG&E wouldn’t sell, the MUD or WPA would seize the system through the power of eminent domain. The agency would then issue revenue bonds to cover the cost of the acquisition and start-up, hire a staff, and go into the retail power business. Sales of electricity would bring in revenue that would cover operating costs and pay off the revenue bonds; any money left over at the end could be turned back to the city’s General Fund, used to reduce rates, or used for conservation and environmental projects. So the first step in analyzing the finances of a MUD is to figure out how much revenue would be available each year. That’s a relatively simple calculation. According to the California Energy Commission, PG&E currently sells about 5.4 billion kilowatt-<\h>hours of electricity to customers in San Francisco. (This figure doesn’t include energy used by the city government, since government agencies use power from the city’s Hetch Hetchy dam.) Residential, commercial, and industrial customers all pay different rates. If a MUD sold power at current PG&E rates (as provided to us by PG&E spokesperson Ron Low), it would bring in $562 million in revenue (enough to create a big annual surplus – roughly $36 million.) But a MUD or power agency almost certainly wouldn’t sell power at PG&E’s high rates – one major attraction of public power is that it offers cheaper electricity. So in both of our scenarios, we assumed that the rates would be at least 10 percent below PG&E’s rates. In fact, as our study shows, rates could drop as much as 20 percent without harming the MUD or WPA’s viability. What’s it cost? There are three basic categories of costs that the agency would have to cover. The first is payments on the bonds, the second is generating or buying power, and the third is basic operations and maintenance (paying the staff to keep the system up and running, to send out bills, to read meters, as well as operating the repair trucks, etc.). Electricity can’t just be delivered to the doorsteps of customers like canned ham in a UPS box. It has to be distributed through a network of transformers, substations, wires, and poles and measured with individual meters. And until the public power agency owns that distribution network, it can’t sell a single kilowatt. Unfortunately, the system that’s now in place in San Francisco is owned by PG&E – and almost everyone involved agrees that it would be cheaper, easier, and quicker for the city to take over that system than to build a new one from scratch. That’s what SMUD did and what most other public agencies that have gotten into the power business in the past half century have done. A MUD or a city power agency would have the right to seize PG&E’s property by eminent domain. But PG&E would be entitled under law to fair compensation for the taking of its property, and one of the most complex, bitter – and crucial – issues involved in establishing public power will be the price tag. “This is not an easy case at all,” Richard Epstein, a professor of law at the University of Chicago and a national expert on eminent domain, told us. “I can guarantee you that nobody, but nobody, has any idea right now what fair compensation would be.” The issue will almost certainly be settled in court. PG&E insists that its San Francisco property is worth a small fortune – as much as $1.4 billion. In a 1996 study the Economic and Technical Analysis Group suggested that the price could be anywhere from $315 million to $1.2 billion. The ETAG study, which was highly favorable to PG&E, suggested that the most likely figure was around $795 million. The reason those figures are so widely divergent is that there are numerous ways of evaluating what a utility’s property is worth. The simplest is to establish what PG&E originally paid for the property, then factor in depreciation. That’s how insurance companies decide what they have to pay you if your car is stolen. The process generally leads to a low figure favorable to the city. But courts have recently been somewhat more friendly to an analysis that recognizes that utility property is more valuable than, say, a private car, because the utility property produces income. One way to address that is by valuing the property at its replacement cost and factoring in the value of a “going concern” – which, of course, leads to a much higher price. Real market value But there’s another way to look at the issue, and that involves going to the state agency that appraises the actual market value of PG&E’s property for tax purposes: the Board of Equalization. Every year the board’s appraisers evaluate exactly what PG&E’s property is worth – and the agency’s record is pretty good. When California’s private utilities sold 22 power plants under deregulation, the board checked its appraisals against actual market prices, and while sale prices for some plants varied from estimates, the board was accurate to within 1 percent overall, chief appraiser Harold Hale told us. The Board of Equalization estimated that as of January 2001, all of PG&E’s property in San Francisco was worth $962,140,298. That includes property that isn’t at all relevant to running an electric utility. The value of the property actually used in the electricity business, the board says, is $753,978,471. But that figure includes PG&E’s huge 77 Beale St. headquarters office complex, which the city almost certainly wouldn’t want or need to buy in an eminent domain action. If you subtract 77 Beale St. (which one real estate expert we contacted said was worth about $225 million as of Jan. 1), then the value of the property the city might actually buy is about $528 million. It may be even less than that: the real estate market has fallen almost 15 percent since Jan. 1, according to our expert, a senior executive at one of the city’s biggest firms, who asked not to be identified by name. However, to be conservative, we’re sticking with the Jan. 1 figure. Epstein, who has worked as a consultant fighting municipalization efforts and thus isn’t inclined to be biased in favor of a public buyout, agreed that using the Board of Equalization figures is “certainly a good place to start.” There’s no guarantee that the courts will accept this approach (although, with PG&E in bankruptcy court right now, it’s also entirely possible, experts say, that PG&E might be forced to accept a much lower value for its property and sell it without a fight, in order to pay off some creditors with cash). So we also analyzed a worst-case scenario, essentially accepting the figures of ETAG’s much maligned report and assuming that, under a replacement cost-<\d>plus-<\d>”going concern” analysis, the city would have to spend $795 million to take over the system. (Even ETAG concluded that it’s unlikely the final price would be as high as PG&E’s estimate; nobody whose property is up for seizure starts off by quoting a realistic price.) No matter what the price, the bond sale will have to include some money for contingencies – the actual cost of the bond sale, start-up cash, etc. We’ve added $50 million for those costs. Paying the staff, buying power PG&E doesn’t publicly reveal its operating costs for San Francisco (or any other specific service area). And it’s difficult to use the company’s system-<\h>wide operating costs as a basis for estimating San Francisco costs, since the population of San Francisco is so much denser than in most of the company’s northern California territory. The denser the population, the cheaper it is to serve; the distance between customers is smaller, so you need less transmission line per customer. Reading meters is faster, since the employee doing that work doesn’t have to drive long distances between each house. Repairs and maintenance are cheaper for the same reason. And PG&E’s costs aren’t a fair comparison for a public power agency anyway: PG&E pays huge executive salaries (see “Public Power vs. PG&E,” page 24), which are included in the operations overhead. So we based our cost estimate on LADWP, which is about as close a comparison to San Francisco as we could find. Los Angeles is not quite as dense as San Francisco, so the L.A. figures are almost certainly higher than what San Francisco would pay, but they provide a reasonable, if conservative, estimate. LADWP’s cost per customer is $383; multiplied by the number of customers in San Francisco, that cost is $131 million a year. Then there’s the question of generating or buying the electricity. Here San Francisco has a huge advantage over other public power agencies: The city owns a large hydro<\h>electric dam that can generate enough to cover some of the local power needs – and it’s already paid for. Power from the Hetch Hetchy dam is cheap: the cost of operating the system is only about 2¢ a kilowatt-<\h>hour. Unfortunately, the city also has to pay PG&E to ship the power over its lines to the city borders, since the city has no complete transmission line to carry the power here; San Francisco pays PG&E $9.6 million a year in what’s known as “wheeling fees.” San Francisco currently sells most of the available Hetch Hetchy power to the Turlock and Modesto Irrigation Districts. Our analysis assumes that those contracts will be broken and that much of the power – 425 million kilowatt-<\h>hours’ worth – will be available to the MUD or WPA. The city also has a very expensive contract with Calpine to provide backup energy when water is low at the dam. The wheeling fees and Calpine deal boost the actual cost of Hetch Hetchy power to about 4¢ a kilowatt-hour. But the Calpine deal ends in five years, at which point Hetch Hetchy power will be far less expensive – and the MUD’s costs will go down. Green power Our analysis is based on the assumption that San Francisco will move as rapidly as possible to reduce its reliance on fossil fuels (see “Green City,” 9/26/01). Not all of the alternative-<\h>energy sources that should ultimately be part of the city’s mix are likely to be online when the MUD starts operating, so we’ve again been conservative, assuming in our worst-case scenario only a modest amount of solar power to supplement Hetch Hetchy power. In our best-case scenario we assume that the city will be able to develop 200 megawatts of solar and wind power – five times as much as projected in the solar bond measure, Proposition B, and enough to power 200,000 homes. The cost of solar and wind is easy to determine: it’s the cost of the interest on the bonds needed to buy and install the windmills and panels. Once they’re up and running, they cost very little to operate – and the fuel, of course, is free. Based on the San Francisco Public Utilities Commission staff’s analysis of Prop. B), 40 megawatts of solar, wind, and efficiency programs – the equivalent of 98 million annual kilowatt-<\h>hours – will cost about $7.5 million a year. Our ambitious plan – for five times that much solar and wind power- would cost $38 million a year. (Again, the actual costs will probably be lower; once a big agency orders a large amount of solar- or wind-<\h>generating facilities, the price goes down substantially.) The rest of the power the city needs will have to be bought on the open market. Because the market is so volatile, it’s hard to say exactly what that cost would be. But futures contracts for power are listed on the New York Mercantile Exchange Web site, and they’re currently running at less than 4¢ a kilowatt-hour. That price is expected to decline in the future. Again, we’ve stuck to conservative numbers, assuming the MUD or WPA would have to pay 6.9¢ a kilowatt-<\h>hour for power generated locally, by Mirant Corp.’s Potrero Hill power plant (one energy expert told us that Mirant is unlikely to accept less than the 6.9¢ the state is now paying for power), and 5.5¢ a kilowatt-<\h>hour for power bought from out-of-town sources. We assumed that the Potrero plant would operate at its capacity. The power the city would import can’t exceed the amount that can be carried along the one transmission line leading into San Francisco, and our projection meets that criterion. PG&E pays a substantial amount of taxes to the city, and almost all of the San Francisco-<\d>Brisbane MUD Board candidates have pledged to make sure that, at the very least, the city’s General Fund doesn’t lose any money if the private utility is replaced with a public agency. So part of the MUD’s expense would be the payment of a fee to replace what PG&E paid in taxes. The utility pays three major taxes: property taxes, a franchise fee, and business taxes. Based on the Board of Equalization’s assessed value for PG&E ($962 million) and the city’s property tax rate, PG&E’s property taxes are about $1 million. The franchise fee – 1.5 percent of sales – adds another $8.4 million. It’s impossible to say how much PG&E pays San Francisco in business taxes, since that figure is not public, but even at several million dollars a year, it wouldn’t significantly change our bottom line. Unanswered questions There are plenty of questions our analysis doesn’t – and can’t – answer, factors that are impossible at this point to predict with any accuracy. PG&E customers, for example, have to pay a substantial surcharge on their electric bills for what’s known as the CTC, or competitive transition charge. In essence, that’s the money ratepayers have been forced to cough up to cover the cost of PG&E’s bad investments in nuclear power. It’s possible that a San Francisco power agency would have to include some of those charges in its bills – but according to Mindy Spatt, media director at TURN, it’s unlikely. The CTC is expected to end next year and probably wouldn’t be a factor by the time the MUD or WPA was up and running. It’s also unclear whether the MUD or WPA would have to pay a share of the costs of the expensive long-term power contracts that the state Department of Water Resources has signed to buy power for the bankrupt PG&E. There would almost certainly be some substantial legal fees, possibly in the millions of dollars, that would reduce the surplus during the first few years (but not once the eminent domain issues were settled). Most of the MUD candidates have voted to shut down PG&E’s Hunters Point plant, and it’s unclear how much it will cost to decommission that facility. The MUD or WPA could also buy the Potrero plant (it recently sold for $330 million) and pay less for the power generated there. And, of course, it’s uncertain how much electricity will cost on the open market in the next few years. That’s why the MUD or WPA would probably want to move aggressively to increase its own generating capacity. But if power prices go up, one thing is clear: PG&E’s prices will go up higher, and faster, than the prices of a public power agency. Voters won’t have to take our word alone on the subject. The public will have more information on San Francisco’s energy plans in the coming weeks. The county’s Local Agency Formation Commission is planning to bring in experts on public power and energy for hearings, and Smeloff is hiring Amory Lovins’s Rocky Mountain Institute to assess the city’s energy alternatives. Both reports are expected before the Nov. 6 election. Our analysis isn’t that radical or unusual; it just confirms the experience of every other major public power agency in the state. We’ve found what just about everyone who’s gotten out from under the private utilities already knows: public power is cheaper. It’s that simple. Public power in San Francisco: Best-case scenario (Low rates, extensive renewable energy) Revenue1 Residential sales 1.481 billion kwh @ 11.5¢ per kwh $170 million Commercial/industrial sales 3.942 billion kwh @ 9.5¢ per kwh $374 million TOTAL $544 million Expenses Payment on revenue bonds $578.9 million @ 8 percent2 $50.9 million Cost of power * <\i>Hetch Hetchy 425 million kwh @ 4¢ per kwh3 $17 million * <\i>Solar, wind, efficiencies 500 million kwh4 $38 million * <\i>Potrero Hill plant 1.6 billion kwh @ 6.9¢ per kwh $110 million * <\i>Contract purchases 2.90 billion kwh @ 5.5¢ per kwh5 $160 million Operations and maintenance6 $131 million Replace PG&E’s city taxes7 $9.4 million Public benefits8 $10 million TOTAL $526 million Surplus $18 million This chart shows how a San Francisco public power agency could take over Pacific Gas and Electric Co., reduce the city’s reliance on fossil fuels, provide all of the electricity the city needs, and still have money left over. The analysis would apply to either a municipal utility district or a city water and power agency. Proposals for both are on the November ballot. (The MUD proposal would include both San Francisco and Brisbane, but since Brisbane is a very small area – only about 4,000 residents – and since it’s difficult to get accurate data on Brisbane’s current usage, our numbers include only San Francisco. The cost of providing service to Brisbane and the revenue from that jurisdiction would not significantly change the analysis.) The scenario presented here is an optimistic one – although, based on our research, the figures are quite realistic. All of the figures we’ve used are conservative – if anything, our analysis underestimates the financial viability of the MUD or a city WPA. The bottom line: Even with residential rates 20 percent below what PG&E currently charges, and with a huge investment in solar and wind power (five times the size of what the city is currently planning), the MUD or WPA would run a large surplus. This study reflects what a MUD or WPA would be facing several years into its existence. In the first few years, the agency would probably have to buy more power on the open market and would generate less from solar and wind (which take time to set up). But on balance that probably lowers the cost of power (solar is comparatively expensive). There are certain to be factors that we missed – although our cost and revenue projections are very similar to what we found in the annual reports of other large public power agencies such as the Sacramento Municipal Utility District (SMUD) and the Los Angeles Department of Water and Power (LADWP). But we’ve accounted for every foreseeable big-ticket item, and the projected surplus is large enough to cover unexpected costs. 1Revenue is based on sales of 5.4 billion kilowatt-hours: the amount PG&E currently sells in San Francisco, according to the state Energy Commission. A MUD or WPA could set rates at any level it wanted; for this analysis, we set residential rates at 20 percent below PG&E’s current rate of 14¢ a kilowatt-hour rate (which is projected to rise sharply). We assumed that commercial and industrial rates would be at the low end of PG&E’s scale. 2This assumes the MUD or WPA can buy PG&E’s assets at current market value, as assessed by the state Board of Equalization as of Jan. 1, 2001 (see story for details). Ken Bruce of the Board of Supervisors’ Budget Analysts Office told the Bay Guardian that 8 percent would be a reasonable projection for the interest on revenue bonds. 3Hetch Hetchy currently generates about 1.7 billion kilowatt-hours a year, and half of that goes for city government needs – Muni, the lights at City Hall, etc. We assumed that the city would pay the MUD what it pays now – the actual cost of generating the power – so the power sold to the city would be a financial wash. Thus it’s not in our analysis as either a cost or a revenue item. The cost we project for Hetch Hetchy power is high – it includes unfavorable contracts that will expire in five years (see story). The actual future cost would be closer to 2¢ a kilowatt-hour. 4The cost of solar and wind is based on financial estimates for Prop. B. 5It’s impossible to determine exactly what it would cost the MUD or WPA to purchase power in the future, but future contracts currently listed on the New York Mercantile Exchange are going for less than 4¢ a kilowatt-hour, and that price is expected to drop. Again, we took a conservative estimate; actual costs might be lower. 6Based on the cost per customer of operations and maintenance at LADWP (see story). 7The MUD would have no obligation to pay city taxes, but almost all of the candidates for MUD director have pledged to make sure the city doesn’t lose money – in other words, the MUD would almost certainly pay fees equivalent to what PG&E was paying in taxes (see story). 8The state mandates that power companies or agencies spend 2 percent of revenues on “public benefits” – conservation, environmental programs, and the like. Public power in San Francisco: Worst-case scenario (Moderate rates, less renewable energy) Revenue Residential sales 1.481 billion kwh @ 12.6¢ per kwh1 $186 million Commercial/industrial sales 3.942 billion kwh @ 9.5¢ per kwh2 $374 million TOTAL $560 million Expenses Payment on revenue bonds $850 million @ 8 percent3 $74.4 million Cost of power * <\i>Hetch Hetchy 425 million kwh @ 4¢ per kwh $17 million (includes wheeling and backup)4 * <\i>Solar, wind, efficiencies 98 million kwh5 $7.5 million Purchased power6 * <\i>Potrero Hill plant 1.752 billion kwh @ 6.9¢ per kwh $120 million * <\i>Contract purchases 3.098 billion kwh @ 5.5¢ $170 million Operations and maintenance7 $131 million Replace PG&E’s city taxes8 $9.4 million Public benefits9 $10 million TOTAL $539 million Surplus $21 million This chart shows how a public power system in San Francisco would operate if some of the worst-case assumptions are true: if, for example, the municipal utility district or power agency had to spend $800 million to buy out PG&E’s system (the highest likely figure, even according to pro-PG&E studies) and if the MUD was unable to fund and site affordable renewable-energy systems and was thus forced to rely on buying a large amount of its power from the Potrero Hill plant (owned by Mirant Corporation) and from other generators through long-term contracts. Even under those circumstances, the chart shows, the MUD could cut residential rates by 10 percent, keep commercial and industrial rates at the low end of PG&E’s rates, and still end the year with a surplus. As in all of our calculations, the numbers are very conservative; expenses would probably be considerably lower. 1The MUD could set rates at any level it wanted; for this scenario, we’ve set residential rates at 10 percent below PG&E’s current rates. 2The commercial/industrial rate is at the low end of PG&E’s equivalent rate. 3See story for details on the $850 million figure. The bond rate of 8 percent is based on an estimate from Ken Bruce of the Board of Supervisors’ Budget Analyst’s Office. 4See story and “Public Power in San Francisco: Best-Case Scenario” for details. 5This is the amount of solar and wind power projected in the city’s report on the solar bond measure, Proposition B. 6See story and “Best-Case Scenario” for details. 7Based on comparable costs per customer at LADWP. 8See story. 9See story.

The Chamber attacks public power

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The SF Chamber of Commerce is getting itself all into a frothy lather over the prospect of a public-power campaign, and the email that the Chamber sent out today is full of insanely inaccurate iinformation.

Here’s the email and a few notes on its most bizarre claims:

This Friday, June 27 at 10:00am at City Hall, Room 263 the Rules Committee will consider a measure that would put the City in control of our power system. The cost of this measure will be billions of dollars, paid for with higher utility bills, especially for business.

The cost to buy the PG&E electric system in San Francisco in 2010 is presently expected to beat least $4.02 billion. This is only a preliminary estimate, the final figure could be substantially higher. When you include the interest payments on the bonds and the associated severance and financing costs, the ultimate cost for a takeover will be more than twice that amount.

WHAT? Where do you suppose that $4.02 billion came from? It clearly didn’t come from any realistic study. PG&E’s dilapidated, poorly maintained distribution system is probably worth less than $500 million — and even if the city had to pay twice that much, it would be more than worthwhile when you look at how much revenue would come in.

San Franciscans Will Pay to Replace the Lost Tax Revenue

Taking over PG&E means removing PG&E from the tax rolls. That will cost taxpayers over $25 million annually in lost franchise fees, payroll taxes, property taxes, and direct contributions from PG&E. Those taxes and payments will need to be replaced – or services will need to be cut. The City is now facing one of the most severe budget shortfalls ever. The power system takeover will make this budget gap at least $25 million worse. Again, there is no current plan to replace this lost revenue. The PG&E takeover means either service cuts and layoffs – or another massive tax increase.

HUH? The $25 million the city would lose would be more than replaced by the money — several hundred million at least — that the city would gain in extra revenue from running a municipal utility.

We’ll All Pay the Price of Putting City Hall in Charge of our Power System

Right now, PG&E is regulated by the State of California. But a city-run power system would be exempt from most state regulations, giving the Board of Supervisors the power to make some customers pay more so others can pay less, siphon away funds needed for the retrofit of the Hetch Hetchy water system and delay investments in the safety and reliability of our energy grid.

WELL, actually the supervisors could mandate renewable energy — which PG&E isn’t doing.

So the battle is already underway, and already, PG&E’s mouthpieces are putting out wildly misleading data.

Should be a great hearing tomorrow.

Budget Battle bumps up against Gay Marriage

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bridalmoneybag.jpg
Bridal Money bags are sexy, budget documents ain’t.

As LGBT couples were praising Mayor Gavin Newsom for making legally wedded bliss a reality in their lifetimes, a parallel community inside City Hall was criticizing the Mayor for making potentially fatal cuts to public health programs, many of which have served San Francisco’s LGBT community for decades.

Unfortunately, between all the gay marriage hoopla going on in the marble corridors of City Hall, and the burn out that non-profits are already feeling having suffered crippling mid-year cuts, there was an unprecedented feeling of doom and gloom during this year’s Beilensen Hearing inside the Board of Supervisors’s chambers.

The Beilensen Hearings, which the state requires when cuts are proposed to public health programs and services, have become an annual dance, which goes like this: first the Mayor proposes massive cuts, then the Board tries to restore funds, next competing rallies are held, and finally most of the programs are restored,

Only this year, there is little to no money to be found.

During his June 2 budget annoucement, Mayor Gavin Newsom pointed out that while the City is facing a record $338 million deficit, it is also is seeing healthy increases in tax revenues.

So, why such a massive imbalance this year? Newsom claims we are spending more than we are taking in, but that answer sidesteps the political reality of just why that is happening on such a greater scale, this year.

The answer to that question lies in two directions: Newsom’s approval, and the Board’s largely unflinching support (Sup. Chris Daly was the lone dissenting voice) for union contracts last summer, when the Mayor was up for reelection; and Newsom and the Board’s failure to introduce legislation last year to create new revenue streams to make up for the increasing slice of funds that those same union contracts, predictably, are swallowing up.

To their credit, Board President Aaron Peskin (who celebrated his birthday June 17, just as gay marriage mania was hitting City Hall big time) and Sup. Jake McGoldrick, who chairs the Board’s powerful Budget and Finance Committee, have now bitten the bullet and introduced legislation that seeks to increase property transfer taxes and close the pay roll tax partnership loophole.

But even if these measures are approved, (and that’s a big if, they won’t ease this year’s budget pains.

What could help, on a more immediate level, is the identification of significant savings within the Mayor’s proposed 2008-09 budget. And to that end Budget Committee chair McGoldrick has dug his claws deep into Newsom’s proposed budget document and drawn blood.

This blood letting began ast week, when McGoldrick led the charge against funding the Mayor’s proposed $3 million Community Justice Center. (The proposal got sent back to committee where it will likely fester, and the Mayor has responded by placing a measure on the November ballot that would allocate $1.8 Million in city funds and earmark an additional $984,000 in federal grant money to create the proposed center.)

And at yesterday’s Board meeting, McGoldrick told me that he has identified potential savings of $8-10 million from the San Francisco Police Department, including eliminating over staffing as well as defunding two out of the Mayor’s three proposed police academies.

“Any claims that they are understaffed are not true,” said McGoldrick, who says he came to this conclusion by factoring in 129 civilianized positions into SFPD staffing totals.

“And I’ve already told the Mayor and the Chief of Police that they are not going to get three police academies, and that the Mayor’s 311 Center is not getting 26 new positions,” McGoldrick continued. “We are going to have to figure out a more efficient way to run it. This is all about priorities. My priorities are the sick, the shut-ins, the elderly, children, the mentally ill and the victims of domestic violence.”

Meanwhile, Sup. Chris Daly extracted hollow laughs when he announced that he would not make the exact same speech as he did at last year’s Beilenson Hearing.

Daly was referring to his now infamous speech in which he referred to “allegations of cocaine use,”—allegations that were whispered around town, after it was revealed that Newsom had had an adulterous affair with the wife of his then campaign manager Alex Tourk, but that were never proven and thus would have been better left unmentioned in a public hearing that was seeking to illuminate Newsom’s wacky budget priorities..

But because Daly mentioned them, the media, which doesn’t like covering budget hearings, since there’s nothing sexy about covering hours of testimony in which people describe , over and over, the devastation that proposed cuts will have on their programs, happily refocused its lens on the alleged inappropriateness of Daly’s speech, thereby helping the Mayor get off the hook for proposing cuts to substance abuse treatment programs, in the same year he claimed to be undergoing alcohol abuse therapy.

Or maybe it was because that in this LGBT-friendly town, Newsom will always be remembered as the patron saint of gay marriage, and because of his sainthood voters will largely absolve him of all his other sins, including making decimating financial cuts to public health programs that have helped the LGBT community for decades.

Either way, this time around, Daly, (while complaining that the Beilenson hearing should happen in front of the Mayor), didn’t bother to imply that Newsom had somehow lost his moral compass.

Which was probably a wise l move, given that at that very moment the Mayor was being elevated to international renown for having pushed the gay rights envelope all the way to the wedding altar, at a time when the rest of the Democratic Party, fearing another four years of President Bush in 2004, was whimpering “too much, too soon, too fast.”

Instead, Daly commented that his district will likely look like “the Night of the Living Dead” once Newsom’s proposed budget cuts go into effect,

Daly also introduced the “Treatment on Demand Act,” which “requires that the City and County of San Francisco “maintain an adequate level of free and low cost medical substance abuse services and residential treatment slots commensurate with demand.”

Daly’s act measures demand, “by the total number of filled medical substance abuse slots plus the total number of individuals seeking such slots as well as the total number of filled residential treatment slots plus the number of individuals seeking such slots.”

But for now, it’s budget hearing season, and advocates like Bill Hirsch of the AIDS Legal Referral Panel are telling the Board how they believe the Mayor’s proposed cuts amount to “a dismantling of a system of care that has taken over 25 years to put together.”

“We’re terribly disappointed with the mayor’s Budget,” Hirsch said, against a soundtrack of whoops of joy as gay couples celebrated their weddings outside the Board’s chambers.
“Hopefully, the Board can help prevent the worst of this.”

Others, like Connie Ford of Office Employees Local 3, which represents 800 non-profit workers, called the 22 percent cuts that the Department of Public Health is facing, “the most chaotic, unstrategic and ill-advised cuts” she’d ever seen.
“We’ll hurt people and the cuts will actually cost us more money” Ford said. “There is no rhyme or reason to these cuts.”

FelicianHouston, program director of a Woman’s Place, said that the proposed cuts are a “reflection of the dismantling of the continuum of care.”
“Just don’t do it.” Houston said.

And the list of speakers went on and on, including representatives for suicide prevention, crystal meth intervention, and mobile assistance patrol programs.

“Studies show that for every one dollar spent on substance abuse treatment seven dollars are saved at the law enforcement level” said several speakers. It’s a comment that brings us full circle to the insanity of proposing to start new programs, like the Community Justice Center, while proposing to slash the programs that would serve that center.

Stay tuned for move coverage of this and other budget insanities, between now and the end of July, when the annual budgetary approval cycle is scheduled to be resolved.

Editor’s Notes

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› tredmond@sfbg.com

Ask any elected Democrat in San Francisco about the governor’s budget, and you’ll get an instant answer: it’s awful. It’s brutal. It sucks. Education, housing, the environment … everything we care about is being gutted because the governor and the Republicans in Sacramento won’t raise taxes.

Which is absolutely correct.

Now ask those same Democrats what they think about Mayor Gavin Newsom’s budget. In too many cases, the answer’s a little slower, and a little softer. Gee, it’s too bad that the economy, and Washington and Sacramento and all of these other forces out of our control leave us no choice but to tighten our belts and do things that none of us really wants to do. Gee, Gavin doesn’t like cutting either, but he has to balance the books. Gee, it’s certainly not the mayor’s fault.

Which is absolutely wrong.

The governor of California is not the only chief executive who can look for revenue solutions to a budget shortfall. The mayor of San Francisco can do that too. In fact, Newsom wouldn’t have to look far: Supervisor Aaron Peskin has introduced two measures that together could bring in a minimum of $30 million per year and, in good years, $80 million or more. That’s about a quarter of the budget deficit, enough to save a whole lot of city services, city jobs, and city resources for the needy.

Both tax measures are aimed at the wealthier end of the spectrum. One would raise the transfer tax on real estate sales of more than $2 million. Few first-time homebuyers would see any impact at all, and the ones who do … well, if you can afford a $2 million house, you can pay a reasonable transfer tax. The biggest revenue would come from major downtown commercial property sales: when the Bank of America Building is sold for $1 billion, none of the investors are paupers and the corporations, real estate investment trusts, and financiers involved have all done quite well under the George W. Bush administration’s tax cuts. This is, for the most part, a tax on the rich.

The second measure would eliminate a loophole in the business tax law that allows some partnerships, like law firms, to avoid payroll taxes. See, if you’re a partner in a firm and you earn "profits" in the form of a partnership payout as opposed to a "salary," then the money you make doesn’t get taxed by the city. Most of these outfits are big firms that can afford to pay the city’s business tax. It’s only fair: companies that don’t operate on the partnership model have to pay taxes, and so should everyone else.

The two measures need a vote of the people, and passing any tax is hard. It would help immensely if the mayor endorsed these progressive taxes — and I guarantee that if a Democratic legislator in Sacramento introduced a statewide tax bill hitting the exact same group of people for the exact same amount of money, Newsom and all his Democratic allies would support it (and if the governor vetoed the bill, those same Democrats would denounce him).

The measures would take effect in the middle of the next budget year, and the income could make Newsom’s river of red ink a good bit smaller. He could, in theory, endorse the measures, work for them, and include the revenue in his proposed budget. But so far Peskin hasn’t heard a word from Newsom’s office on this. Neither have I.

Gavin? Hello? *

Avoiding a Lennar meltdown

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EDITORIAL Millions of dollars in campaign money kept Lennar Corp.’s plans for southeast San Francisco alive. But the financial news isn’t looking good for the giant homebuilder — and the San Francisco supervisors ought to be worried.

Last week, Sup. Chris Daly released a document he obtained from the Redevelopment Agency showing that the city had quietly sought a $25 million grant from the state Department of Housing and Community Development to cover a projected loss in Lennar’s Hunters Point Shipyard project.

The problem: increased construction costs, trouble in the financial markets, and unforeseen environmental issues have eaten up all the money that Lennar and the city had made available for infrastructure improvements on the site. That means the roads, water and sewer pipes, and other basic stuff that project will need to go forward are no longer adequately funded. Without an influx of state money, the city argued, the whole shipyard project would either be "drastically reduced in scope" or put on hold for another two or three years.

"Without the requested $25,021,079 Infill grant allocation, our infrastructure project faces a serious risk of being mothballed," city officials wrote. As Sarah Phelan reported at sfbg.com, the state rejected the application last week.

The shipyard project is the first piece of Lennar’s grand-scale Bayview Hunters Point redevelopment — and it’s already in serious financial trouble. The same issues that are causing problems at the shipyard will be in play when Lennar starts work on the 10,000 new housing units now approved for the Bayview–Hunters Point redevelopment area. Construction costs will be even higher in a year or two. The end of the mortgage crisis is not yet in sight. As Daly told us, the shortfall in the first part of the project "casts a very large shadow on the mixed-use development envisioned under the conceptual framework on Proposition G."

Then on June 8, a Lennar subsidiary that’s working on redeveloping the Mare Island Naval Shipyard property filed for Chapter 11 bankruptcy. That project is now in limbo as the development consortium — facing economic pressure and unable to get the necessary financing — seeks protection from creditors. Combined with the fact that Lennar’s bond ratings continue to tumble (Lennar debt was downgraded again June 10), San Francisco officials ought to be asking the obvious question: can this Miami-based developer actually pull off this project? Or is it possible that after all of the political debate over the Lennar plan, the lack of adequate affordable housing, the future of the 49ers, the toxic contamination of the site, and everything else, the entire massive project could collapse because Lennar doesn’t have the financial ability to finish it?

This, of course, is one of the inherent problems with the traditional redevelopment model. The city essentially will be giving a huge piece of public land to a single private company that will then be responsible for building an entire new neighborhood with homes, offices, stores, and parks. In theory the developer will make enough money to stay afloat until construction is finished — and the property taxes in the area will increase enough to fund necessary infrastructure (schools, roads, bus lines, water and sewer service, and other public amenities). But if the developer goes broke, the city is left hanging.

That’s what’s happening in Vallejo, where a city that already has serious financial problems is facing the possibility that environmental cleanup at Mare Island will grind to a halt, and that a $6 million municipal service fund — paid for in part by Lennar — could suffer.

The prospects for San Francisco could be far worse. Suppose the city goes ahead and transfers public land to Lennar — which then goes into bankruptcy. Would that city land be treated as a private asset and given over to whatever creditor or vulture fund picks up Lennar’s ghost?

Fred Blackwell, the director of the Redevelopment Agency, won’t return our phone calls, but the supervisors need to hold a hearing on this and force him and Lennar to provide some answers. The board needs an independent audit of Lennar’s finances, either by Budget Analyst Harvey Rose or an outside consultant. And until the city knows for sure that the developer can actually handle this project, the entire redevelopment process for Bayview–Hunters Point needs to be put on hold. *

A heart once nourished

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› gwschulz@sfbg.com

Community court, every second Thursday at 10 a.m. Narcotics Anonymous on Wednesday. Apprenticeships for construction workers, Monday, bright and early.

The ancient letter board just inside the entrance of the Ella Hill Hutch Community Center tells much of the story of this neighborhood institution. Since 1981 it’s been a crucial hub for the Western Addition, a mostly level stretch of terrain west of downtown that rivals the Mission District and Bayview–Hunters Point as the source of the most despair from senseless gun violence.

For decades Ella Hill was a safe haven, a place where kids and seniors felt comfortable, where people could learn and teach and talk and work together, a little oasis in the world of urban hurt.

A placard affixed to one wall of the entryway honors Thurgood Marshall, the nation’s first African American US Supreme Court justice. In a small office nearby, a tutor assists a young girl with the multiplication table. Elsewhere, a list of rules forbids profanity, play-fighting, and put-downs.

There’s also a poster of Ella Hill Hutch, the first black woman elected to San Francisco’s Board of Supervisors, where she served from 1978-81.

But in 2006, a man was murdered during daylight hours in the center’s gymnasium before dozens of witnesses. That slaying was one of at least five brutal incidents that took place in the shadow of Ella Hill between 2006 and 2007; three more murders occurred within blocks. Many remain open cases today.

And now the center is having serious problems — troubles that reflect those of the city’s African American population, which has been plagued by violence and socioeconomic changes that are closing opportunities and forcing longtime residents out the city.

Several census tracts in the neighborhood that at one time contained between 3,000 and 6,000 black residents are down to 1,000 or far less, according to a San Francisco State University study commissioned by the city last year. The report showed that between 1995 and 2000 San Francisco lost more of its black population than 18 other major US cities.

Ironically, the city is now preparing to close the final dark chapter on 50 years of federally subsidized redevelopment in the Western Addition. But the displacement that the bulldozers set off half a century ago continues today, unabated.

That exodus has compounded structural problems at the center just when its remaining clients need it most. The nonprofit late last year underwent an organizational shake up and brief takeover by the Mayor’s Office to save it from imminent financial collapse. The center’s executive director of two years, George Smith III, was fired with little public explanation last year, and a permanent head was named only recently.

As with many aspects of this troubled community, it was unaddressed violence that fed the fire. Simply subsisting in the heart of a violent neighborhood was strain enough for Ella Hill. But suffering an attack from within seemed too much to bear for an institution some call "San Francisco’s Black City Hall."

The 2006 killing took one man’s life, but Ella Hill itself — still facing an uncertain financial future — felt the searing rounds too. Now some wonder if the nonprofit can survive the very violence and poverty it was created to help end in a neighborhood that’s changing forever.

In Ella Hill’s noisy gymnasium at the building’s east end, two teams of middle schoolers practice basketball.

"My job is to be in the best position to box him out for a rebound," their coach says as they crowd around the free throw line.

The kids are radiant and attentive now. But from this same basketball court on April 27, 2006, the Western Addition briefly edged ahead of the rest of the city in extreme bloodshed.

Donte White, 22, was working part-time at the center. As he supervised a basketball game, two unidentified males entered Ella Hill. One brandished a firearm and shot White at least eight times in the face, neck, and chest as several kids looked on in utter horror. Among them was White’s young daughter.

Police arrested 25-year-old Esau Ferdinand for the attack five months after White’s murder. But within two weeks prosecutors decided they could no longer hold him and declined to press charges when a key witness disappeared on the eve of grand jury proceedings.

Even with other witnesses filling the gym, police gathered few additional leads, an all-too-common story in a neighborhood where residents often prefer to avoid both law enforcement and vengeful criminal suspects.

The center installed cameras and an alarm. A buzzer was placed on the front door. But the new security measures cut against Ella Hill’s image as a demilitarized zone, and the center remains shaken by White’s murder. Some parents began barring their children from going there.

"Can you imagine something like that, someone coming into a rec center in the middle of the day with a firearm and shooting and killing a guy?" asks Deven Richardson, who resigned from Ella Hill’s board in 2007 to focus on his real estate business. "That really set us back big time in terms of morale. It really was a dark moment for the center."

Sup. Ross Mirkarimi, whose district includes Ella Hill, says that after he took office in 2004, he learned that the police weren’t stationed at the center during prime hours and had never created a strategy for attaching themselves to the center the way they had at other safe-haven institutions in the city, like schools. He told us he’s had to "really work" to get the nearby Northern Station more integrated into Ella Hill.

"Before the murder of Donte White, there had also been a series of incidences inside Ella Hill Hutch," Mirkarimi said over drinks at a Hayes Valley bar. "Nothing that resulted in anybody getting killed, but certainly enough indicators that really should have been taken more seriously by the mayor."

In June 2006, shortly after White’s shooting, the San Francisco Police Commission and the Board of Supervisors held a tense public meeting at the center. Residents, enraged over the wave of violence that summer in the Western Addition, shouted down public officials, including Chief Heather Fong, who was forced to cut short a presentation on the city’s crime rate.

That same month, the supervisors put a measure on the ballot to allocate $30 million over three years for violence-prevention efforts like ex-offender services and witness relocation. But Mayor Gavin Newsom, following a policy of fortifying law enforcement over community-based alternatives, opposed the measure because it excluded the police department. Prop. A, designed to finance groups like Ella Hill with connections to the neighborhood that the police will never have, lost by less than a single percentage point.

Meanwhile, four homicides in the neighborhood that year joined frequent anarchic shootouts in the Western Addition, including many that never made headlines because no one was killed. The fatalities led to promises by City Hall that the area would be saturated with improved security, including additional security cameras that have mostly proved useless in helping the police solve violent crimes.

On June 3, 2006, 19-year-old Antoine Green was standing on McAllister Street near Ella Hill early in the morning when he was shot to death in the head and back. On Aug. 16, 38-year-old Johnny Jackson’s chest was filled with bullets as he sat in the front seat of a Honda Passport on Turk Street not far behind Ella Hill. A woman next to him in the car suffered a critical gunshot wound to the head.

Two more killings occurred further east at Larch Way, a popular location for murder in the neighborhood.

Burnett "Booski" Raven, a 32-year-old alleged member of the Eddy Rock street gang, was found bleeding at 618 Larch Way early Oct. 7, his body laying halfway in the street and containing at least 10 gunshot wounds. On July 22, police found 23-year-old John Brown, another purported Eddy Rock member, wedged under a Chevy pickup truck, dead from up to seven gunshots.

Brown had reportedly survived two prior shootings, but the Western Addition’s cultural condemnation of "snitching" to police has so infected the neighborhood that he allegedly told police not to bother investigating either of the attacks.

Loïc Wacquant, a sociology professor at the University of California, Berkeley, says neighborhoods like the Western Addition that once contained stable black institutions — schools, churches, and community centers that glued residents together — have been overwhelmed by the rise of a white-collar, service-based economy, the decline of unions, and the withdrawal of meaningful social safety nets.

Cities have responded to the resulting marginalization with more police officers, more courts, and more prisons. But the failure of those institutions to cure rising violence "serves as the justification for [their] continued expansion," Wacquant quoted Michel Foucault, the famous late UC Berkeley sociologist, in the academic journal Thesis Eleven earlier this year.

The roots of the Western Addition’s tragedy go back to the early post-World War II era. In 1949, Congress enacted laws giving cities extraordinary powers to clear out land defined as "blighted." In San Francisco, that meant neighborhoods where low income people of color lived.

The Western Addition was devastated. Huge blocks of houses were bulldozed. Clubs, stores, restaurants — the heart of the black neighborhood — were wiped out. Many residents were forced out of the neighborhood and sometimes the city forever; others lost their property and their livelihoods (see "A half-century of lies," 3/21/2007).

By the 1970s, neighborhood activists were hoping that at the very least the Redevelopment Agency would pay for a recreation facility for kids. But city officials wouldn’t put up the money, recalls the Rev. Arnold Townsend, a longtime political fixture in the city and associate pastor of the Rhema Word Christian Fellowship.

Townsend said activist Mary Rogers — whom he calls "the greatest champion kids ever had in this community" and a famous critic of redevelopment — gave up on City Hall and went to Washington DC, where she sat in at a meeting that happened to include Patricia Harris, Secretary of the Department of Housing and Urban Development under President Jimmy Carter. Rogers, joined by a group of colleagues from San Francisco, bumped into Harris afterward.

"[Harris] shook Mary’s hand like politicians do, and Mary wouldn’t let her hand go until she had a meeting," Townsend said. "They were having a tug-of-war over her hand."

Rogers’ determination paid off, and enough political channels opened up that money for the center became available. Then-Mayor Dianne Feinstein cut the ribbon for the $2.3 million Ella Hill Hutch Community Center four months after the supervisor’s death, complete with outdoor seating for seniors, a gymnasium, tennis courts, and child-care facilities.

A young counselor named Leonard "Lefty" Gordon who worked at the Booker T. Washington Community Service Center, one of the city’s oldest black institutions — it was founded in 1919 on Presidio Avenue, where it remains today — was named executive director of Ella Hill three years later and led the center to wide acclaim for 17 years.

A recreation coordinator at Ella Hill started a reading program for young athletes after discovering that a local high school football star wasn’t aware he’d been named the city’s player of the year: the teenaged boy couldn’t read the newspaper to find out. Other programs for tutoring and job training targeting young and old residents were likewise started under Gordon.

Many of the people we interviewed recalled the "kitchen cabinet" meetings convened by Lefty Gordon at Ella Hill as among their fondest memories. Everyone from the "gangbangers to police" attended Gordon’s meetings, Townsend said, and made them a repository of complaints about what was happening in the neighborhood.

Alphonso Pines, a former Ella Hill board member and organizer for the Unite Here! Local 2 union, eagerly showed up at the meetings for months after attending 1995’s Million Man March in Washington.

"I hate to see brothers die, regardless of whether it’s at Ella Hill," Pines said of Donte White’s 2006 killing. "But that was personal for me, because that was the place where I had sat on the board for years. That was real shocking."

Lefty’s son, Greg Gordon, said that his legendary father — who died of a heart attack in May of 2000 — worked so hard for the center that he allowed his own health to deteriorate.

Most beneficiaries of Ella Hill’s social services now live in the southeast section of the 94115 ZIP code, roughly bordered by McAllister and Geary streets to the south and north, and Divisadero and Laguna streets to the west and east.

The majority of Ella Hill’s approximately $1.4 million annual budget comes from government sources, either through grants or nonprofit contracts.

Newsom, through his community development and housing offices, has given $860,000 over the past three years to Ella Hill to help job-ready applicants obtain construction work and other general employment in the neighborhood. The center launched its JOBZ program in 2006, targeting formerly incarcerated young adults and others with a "hard-to-employ" status.

Caseworkers must convince some participants to leave gangs, deal with outstanding warrants, pay back child support, expunge criminal records, or eliminate new offenses, all of which can exacerbate a desire to give up. Sometimes the center has to buy people alarm clocks.

"None of these other programs that are being funded in this community want to deal with the kinds of kids or people who come to Ella Hill…. [It] is the last stop for everybody," said London Breed, head of the African American Art and Culture Complex on Fulton Street and a Western Addition native. "That’s where people go who have no place else to go, which is why it’s so important."

Most nonprofits working for the city must regularly report their operational costs or show how program funds are being spent on graduation ceremonies and trips to university campuses. The required forms are mind-numbingly bureaucratic and reveal little about what a place like Ella Hill might face on a practical level each day. But last year, former executive director George Smith betrayed a crack in Ella Hill’s veneer.

"Once again violence has impacted the community with three incidents in close proximity to the complex this month alone," he wrote to the San Francisco Department of Children, Youth and Their Families, which supports the center with college preparation grants. "One of the victims was a young man scheduled to graduate from high school in June."

On May 25, 2007, 19-year-old Jamar Lake was leaving a store on Laguna and Eddy streets, northeast of Ella Hill, when a teen suspect opened fire on him. Paramedics were so worried about security in the neighborhood that they fled before attempting resuscitation, according to a report from the San Francisco Medical Examiner. Lake died at General Hospital that day.

Weeks later, a manic 12-hour long feud erupted between several gunmen on McAllister Street. Seven people were wounded during two daytime shootings that took place in the Friendship Village Apartments, across the street from Ella Hill.

Then in July, a suspect randomly and fatally stabbed 54-year-old Kenneth Taylor in the neck as he sat on a park bench near sundown at Turk and Fillmore streets, within easy view of the SFPD’s Northern Station. Police didn’t respond until Taylor stumbled to the sidewalk and collapsed; a witness had to flag down a patrol car.

Following the Lake shooting, the mayor and police department promised, as they had the year before, that foot patrols would be increased in the 193-unit Plaza East Housing Development and other public housing projects in the Western Addition.

But the city’s most visible response has bypassed Ella Hill — which has some street credibility — altogether. Instead, City Attorney Dennis Herrera went to court to get injunctions against street gangs in June 2007.

Herrera’s initial filing came days after the wild shootout on McAllister Street, but the timing was coincidental. The city attorney also had been preparing injunctions against gangs in the Mission and Bayview-Hunter’s Point for months. For the Western Addition, the city attorney noted a "recent rise in violent crimes perpetrated by the defendants," and asked that the members of three gangs be banned from associating with one another inside two "safety zones" marked along the contours of their respective territories, a 14-square-block area that straddles Fillmore Street and rests just north of Ella Hill.

"The conditions within the two safety zones have become particularly intolerable in 2007 as the deadly rivalry between the Uptown alliance and defendant Eddy Rock has intensified," Herrera’s office told the court. "In 2007 alone, this rivalry is the suspected cause of at least three homicides and numerous shootings within the two safety zones."

Some critics viewed barring people from congregating with one another a civil rights violation. And worse, they feared it would merely shove more African Americans and Latinos out of the Western Addition, which would benefit the city’s wealthiest white residents.

"All of this stuff about gang injunctions is a bunch of malarkey," said Franzo King, archbishop of the Saint John Coltrane African Orthodox Church on Fillmore Street. "You don’t really have gangs here…. [In San Francisco] they’re a big club."

Herrera nonetheless convinced a Superior Court judge to issue the injunctions after filing 1,200 pages of evidence arguing that the three "clubs," which include only about 65 people named by the city, are endless public nuisances and force organizations like Ella Hill to battle with them for the affections of Western Addition youth.

Police admit that the injunctions since last year have, in fact, led people to simply leave the neighborhood. Still, they insist the injunctions have reduced trouble in the Western Addition. The Knock Out Posse, for instance, is evaporating, they say.

Paris Moffett, a 30-year-old alleged Eddy Rock leader, told the Guardian in a separate story on the gang injunctions last November that he and others were organizing to quell violence in the neighborhood and would do so in defiance of the gang injunctions (see "Defying the injunction," 11/28/07).

But on the day that story ran, Moffett hampered his new cause when, according to a March 27 federal indictment, police arrested him in Novato for possessing a large quantity of crack and MDMA, as well as a Colt .45 semiautomatic.

After Lefty Gordon died, the center went through a couple of directors in relatively short order. Robert Hector, a second-in-command to Lefty Gordon, helmed the center briefly; he was replaced with George Smith III, who left in 2007.

Meanwhile, problems at Ella Hill grew.

"The seniors just stopped their participation," Anita Grier, a former Ella Hill board member who first ran for the San Francisco City College Board of Trustees in 1998 at Gordon’s encouragement, told us. "Things were never excellent, but they just got much worse once [Gordon] was no longer director."

The center, a standalone nonprofit, had long struggled financially in part because it relied so much on contracts and grants from the city rather than pursuing funds from private donors. Mirkarimi says Ella Hill’s structure is unlike any other community center in the city. Many other centers are directly maintained by the San Francisco Recreation and Park Department.

Contract revenue from one Ella Hill program, such as providing emergency shelter to the homeless, was often diverted to keep another on life support or to simply cover the center’s utility bills.

By early 2007, the center faced a financial catastrophe. Donald Frazier joined Ella Hill’s board as president in January 2007 and embarked on a reform effort to turn the center around. He commissioned what came to be a blistering audit that revealed the nonprofit owed over $200,000 in state and federal payroll taxes. As a result, the center faced $63,000 more in penalties and accrued interest.

Mirkarimi blames community leaders in his district for refusing to acknowledge a crisis at the center and for not turning to City Hall for help when Ella Hill appeared to be slowly rotting from the inside out.

The mayor’s staff, he adds, wanted to believe Ella Hill was working on its own and should’ve continued to do so because, despite its financial reliance on the city, it was technically an independent nonprofit. In reality, Mirkarimi said, "They were afraid to piss off black people, is what it comes down to. They were afraid to tell it like it is — that things weren’t working."

Sending delinquent invoices to the city, failing to institute reasonable accounting standards, and falling far behind on its payroll taxes all threatened the government contracts and grants that kept San Francisco’s Black City Hall afloat. By extension, the audit concluded, that meant Western Addition residents who relied on Ella Hill were "victimized" by the center’s improper use of its limited resources.

Aside from the audit, which Ella Hill instigated itself, there’s no indication in the records of agencies funding the center that any problems were occurring, which implies the city wasn’t paying attention.

"As far as I’m concerned," Mirkarimi said, "we had a renegade institution, and the only reason it wasn’t renegade in an illegal sense was because the lease allowed them to have a parallel governance structure. But it was renegade in the sense that the city neglected to supervise properly."

In November 2007, just after residents hijacked a chaotic board meeting with an extended public comment period, Frazier told the directors in closed session that the Redevelopment Agency was planning to restrict future funding for the center due to its management problems.

One month later, the mayor dispatched an aide, Dwayne Jones, along with redevelopment agency director Fred Blackwell, to a meeting at Ella Hill with an ultimatum. Jones told the assembled that new interim appointees would be taking over the center’s bank books, recreating its bylaws, and electing a new board and executive director. The old board would essentially be dissolved. According to observers at the meeting, Jones told them that if they resisted the plan, funds received by Ella Hill from various city agencies would be jeopardized, as would its low-cost lease of city property.

Two defiant board members viewed the move as a "hostile takeover" of a private nonprofit organization by the mayor and voted against it, but the rest of the board agreed to the restructuring. Mirkarimi says there was simply no alternative.

"Right now it needs to be shrunk to what it can do really well, instead of doing what they had to do in the last five years, an incremental sloppy way of programming," he said.

The interim board in April named a former Ella Hill employee and Park and Rec administrator, Howard Smith — unrelated to George Smith — to be the center’s new executive director. But after all the changes Ella Hill made to fix its leadership problems, there are no assurances the city won’t leave Ella Hill without the money it needs to keep the doors open next year.

It’s noon on a recent Friday and Ella Hill’s new executive director is scrambling to keep things together. An employee wants him to glance at a form. Another man wants to come in and play basketball. Smith has a board meeting minutes from now, but he’s scheduled an interview with the Guardian at the same time.

Smith’s a well-built man dressed in a pressed suit, polished shoes, and a sharply-knotted tie. He’d mostly avoided our calls for weeks. Word spread in the neighborhood that the Guardian was planning some sort of hit piece on Ella Hill.

But it won’t be a newspaper that capsizes the center.

A significant portion of the center’s funding will be threatened over the next year. The redevelopment agency is scheduled to end its 45-year reign in the Western Addition by then, a blessing of sorts since so many people in the neighborhood feel it’s done nothing but upend the lives of black residents. But the end of the agency means that redevelopment funds for Ella Hill’s job placement programs, about $400,000 annually, will disappear.

In addition, about $300,000 more a year will dry up since the San Francisco Human Services Agency hasn’t renewed an emergency homeless shelter contract with the center. Mirkarimi believes the mayor, too, will try to stop providing Ella Hill with funding through his community development office next year.

If Newsom does back away, Mirkarimi warns, there will be "a very loud showdown."

"What I’m worried about is that the Newsom administration is basically cutting and running on this, and I’m not going to allow that to happen, at least not without a fight," he said.

The alternative is for Rec and Park to take over managing Ella Hill’s facilities with DCYF continuing to fund youth programs there while the Redevelopment Agency commits community benefits dollars from a legacy fund to the center — the least it can do after a half-century of transforming the neighborhood, locals be damned.

An interagency council made up of the center’s primary funders could collectively watchdog its performance, Mirkarimi says. Once Ella Hill’s leaders prove that the center has fully returned to its original mission, it can consider expanding to serve other populations in the neighborhood, or even seek a plan to detach further from the city.

The mayor’s spokesperson, Nathan Ballard, did not respond to an e-mail containing detailed questions, and his aide, Dwayne Jones, did not return several phone calls. But Smith said during a later lunch interview at the Fillmore Café that he agrees with Mirkarimi’s idea.

"There are so many programs out there that say they’re doing something on paper, but they’re really not doing it," Smith said. "They’re running ghost programs. So what I’ve been saying at Ella Hill since I got there is, ‘We will do exactly what we said we were going to do.’<0x2009>"

In the meantime, Smith is determined to prove that Ella Hill’s history has only just begun. The mural of Lefty Gordon outside the center received a fresh coat of paint recently, and the color pops. The sidewalk is being repaved and new handrails installed. The walls inside are clear of the aging posters and letter board that hung there a few months ago.

Before heading off to his board meeting, Smith teasingly asks an adolescent boy meandering in the center’s entryway for 75 cents. The boy’s always hitting him up for pocket change.

"I don’t got any," the boy responds.

"You don’t have any," Smith corrects.

Smith suddenly realizes what time it is.

"Hey, why isn’t this guy in school?" he wonders aloud.

At that moment, only the Ella Hill Hutch Community Center was asking the question. *